Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

NEW WRIT.

For the City of London, in the room of Edward Charles Grenfell, esquire (Manor of Northstead).—[Captain Margesson.]

PRIVATE BUSINESS.

London Building Act (Amendment) Bill [Lords] (by Order),

Second Reading deferred till Monday next.

Ipswich Corporation (Trolley Vehicles) Provisional Order Bill,

Read a Second time, and committed.

Oral Answers to Questions — ARGENTINA (RAILWAY SERVICES).

Sir NICHOLAS GRATTAN-DOYLE: 1.
asked the Secretary of State for Foreign Affairs whether, in view of the hardship suffered by British subjects who have equipped and are maintaining the railway services in Argentina, he will again request redress of the disabilities which the Argentine authorities continue to impose upon the operations of those railways?

The SECRETARY of STATE for FOREIGN AFFAIRS (Sir Samuel Hoare): I would refer my hon. Friend to the reply given to my hon. Friend the Member for Aberdeen, North (Mr. Burnett) on 28th May, from which he will see that an award by the President of the Argentine Republic on certain questions at issue as regards the operation of the Argentine railways is expected to be given in the very near future. In the meantime, I can only assure my hon. Friend that the matter is being carefully watched.

Sir N. GRATTAN-DOYLE: In view of the fact that this matter has been raised so often, can nothing be done to facilitate a settlement?

Sir S. HOARE: I think it would be best to await the President's decision. I can again assure my hon. Friend that we are watching the matter very carefully.

Oral Answers to Questions — RUSSIA.

Mr. THORNE: 3.
asked the Secretary of State for Foreign Affairs whether he can give the House any information in regard to the proposed anti-Russian pact between Germany, Poland, Austria, Hungary, Bulgaria, and Jugoslavia?

Sir S. HOARE: I have no knowledge of any proposals for such a pact, and I have no reason to believe that it is in contemplation.

Mr. THORNE: Is it not possible to inaugurate a common-sense pact among the European countries?

Sir S. HOARE: That is a very general question, and I should prefer to deal with it in debate, rather than in answer to a supplementary question.

Oral Answers to Questions — CHINA AND JAPAN.

Mr. MOREING: 4.
asked the Secretary of State for Foreign Affairs whether he has yet received reports from His Majesty's Ambassadors in Nanking and Tokyo on the exact relations between the Chinese and Japanese Governments?

Sir S. HOARE: I have received certain reports, but I am not yet fully acquainted with the true facts.

Captain ERSKINE-BOLST: 5.
asked the Secretary of State for Foreign Affairs whether, in view of the fact that the recent developments in China are producing a serious repercussion on world peace and security, he will consider what steps can be taken, in conjunction with other Powers, to minimise the constant infraction of treaties which is now taking place in the Far East?

Sir S. HOARE: I am making inquiry as to the facts. Until they are definitely established I am not in a position to consider anything further.

Mr. MORGAN JONES: Are the British Government in close touch with the American Government in this matter?

Sir S. HOARE: Yes, Sir, certainly.

Mr. NEIL MACLEAN: 9.
asked the Secretary of State for Foreign Affairs whether Great Britain is pledged by treaty to preserve the integrity of China as a nation; if so, what other nations are signatories to such a treaty; and whether any conference of those nations has been called to influence Japan in recognising the terms of the treaty?

Sir S. HOARE: His Majesty's Government are under no obligation in the matter except as regards anything which might result from the Covenant of the League of Nations and the Nine-Power Treaty.

Mr. MACLEAN: As the Government are under contract by the Nine-Power Treaty, should there not be consultation with the other nations who subscribed to the Treaty in regard to action being taken?

Sir S. HOARE: I would refer the hon. Member to the answer which I gave on Monday, when I dealt with the point. I can assure him that all relevant points are being taken into consideration.

Mr. T. WILLIAMS: If the signatory nations have no obligation, in association with all the other signatories, to intervene in this dispute, and if we have no obligation, what is the value of our signature to the Pact?

Sir S. HOARE: I dealt fully with the position on Monday. I told the House then, and I tell it again to-day, that it is necessary that all the facts be established before I deal with a general question of that kind.

Mr. BANFIELD: 10.
asked the Secretary of State for Foreign Affairs whether Japan has made any proposal to abrogate the Nine-Power Treaty of 1922 in view of its recent infractions?

Sir S. HOARE: I have no knowledge of any such proposal.

Mr. GARDNER: 2.
asked the Secretary of State for Foreign Affairs whether, in view of the fact that Great Britain was one of the signatories of the Nine Power Treaty of 1922, in which all pledge themselves
to respect the sovereignty, the independence, and the territorial and administrative integrity of China, he can state what is the effect of the recent Japanese action in Hopei on this Treaty, and whether His Majesty's Government have made any representations to the Japanese Government in relation to their recent encroachment upon China?

Mr. BLINDELL (Lord of the Treasury): I have been asked to reply. As stated in the answer given on 17th June to the hon. Member for Lincoln (Mr. Liddall) reports as to the recent events in North China are to some extent conflicting. My right hon. Friend is awaiting further reports and he cannot at present say whether the recent Japanese action can be said to have involved the Japanese Government in a breach of the Nine Power Treaty. Certain inquiries are, however, being made of the Japanese Government.

Major PROCTER: 8.
asked the Secretary of State for Foreign Affairs whether, in view of the importance of trade in Northern China to Lancashire, he will take such steps as may be in his power to ensure that the forward policy of Japan in this district is not allowed to be prejudicial to cotton and other commercial interests?

Mr. BLINDELL: Yes, Sir.

Oral Answers to Questions — PUBLIC UTILITIES SECURITIES CORPORATION.

Mr. LIDDALL: 6.
asked the Secretary of State for Foreign Affairs whether he proposes to initiate negotiations with the United States with a view to securing that the management of the Public Utilities Securities Corporation by the Reconstruction Finance Corporation, which is controlled by the United States Government, shall not be exercised in a manner prejudicial to the customers in the United Kingdom of the statutory undertakings indirectly controlled by the Public Utilities Securities Corporation?

Mr. LEVY: 46.
asked the Prime Minister whether his attention has been drawn to the fact that the Reconstruction Finance Corporation, which is controlled by the United States Government, has taken over the management of the Public Utilities Securities Corporation; and, seeing that this latter corporation, through
various subsidiaries, controls many statutory undertakings in the United Kingdom, whether he is prepared to introduce legislation to free statutory undertakings in the United Kingdom from the partial control of a foreign Government?

Sir S. HOARE: So far as the interests of customers are concerned the position is as stated by my right hon. Friend the Minister of Transport on Monday, namely, that statutory undertakings are controlled by legislation, the application of which is not affected by changes in the ownership or control of the shares. As regards the Reconstruction Finance Corporation, I gather that its position in the matter depends on legal action in the United States, the outcome of which is still uncertain.

Sir ARTHUR MICHAEL SAMUEL: Is the right hon. Gentleman aware that the net result of the position may be that those statutory undertakings in Britain will be controlled directly or indirectly by the United States Government?

Mr. LIDDALL: Is the Minister also aware that most of the complaints in respect of electricity supplies in this country are directed against companies controlled by this American corporation?

Sir S. HOARE: I understand that the legal position is not changed. In any case, I have nothing to-day to add to my answer.

Oral Answers to Questions — GERMANY.

HERR HITLER'S SPEECH.

Mr. MANDER: 7.
asked the Secretary of State for Foreign Affairs whether a reply has been received to the seven questions recently put to the German Government through diplomatic channels, with a view to getting some precise information on some of the points raised in Herr Hitler's spceeh of 21st May; and whether the questions and answers can now be published?

Sir S. HOARE: His Majesty's Government have in fact asked for elucidations of a number of points raised in the speech in question, but the replies which they have received have not yet brought matters to a point where they could suitably be made public.

BRITISH EX-SERVICEMEN'S DELEGATION.

Mr. ANEURIN BEVAN: 11.
asked the Secretary of State for Foreign Affairs whether his attention has been called to the proposal to send a delegation of ex-service men to Germany; whether the proposal meets with the approval of His Majesty's Government; and whether the proposal was made with the knowledge and consent of the Government?

Sir S. HOARE: The answer to the first part of the question is in the affirmative. As regards the second and third parts, His Majesty's Government were and are aware that it is the policy of the British Legion to establish friendly relations with corresponding organisations in all countries. They regard the matter as one entirely for the ex-servicemen's organisations.

Mr. BEVAN: Is the right hon. Gentleman aware that exception is not taken to the sending of the delegation, but to the manner of doing so, and to the place and authority which give the proposal a diplomatic significance which it ought not to possess; and will the right hon. Gentleman take steps to see that when the delegation visits Germany it will visit the ex-servicemen in concentration camps and prisons?

Sir S. HOARE: I can only repeat that this is essentially a matter for the ex-servicemen's organisations and is not one in which the Foreign Office, as such, can intervene at all.

Mr. BEVAN: Does the right hon. Gentleman approve or disapprove of a proposal of this sort being made by a person occupying the position of the Prince of Wales?

Sir S. HOARE: I can neither approve nor disapprove. It is not a matter within the competence of my office.

Mr. MORGAN JONES: Can we take it that the visit has no diplomatic significance?

Oral Answers to Questions — ROYAL NAVY.

DEATH OF MARINE SENTRY, DEAL.

Mr. THORNE: 13.
asked the First Lord of the Admiralty whether he can give the House any information in connection with the death of a Royal Marine sentry,
Reginald Mason, who was struck by lightning at Deal; whether he is aware that the deceased soldier was carrying a bayonet in a leather sheath, the bottom of which was tipped with steel; whether the exposed steel on the bayonet was the cause of attracting the lightning; and what action he intends taking in the matter to prevent a similar accident?

The PARLIAMENTARY SECRETARY to the ADMIRALTY (Sir Victor Warrender): I regret that I have no information beyond that which was given in evidence at the inquest. Marine Mason's injuries were very extensive, and the position of certain of them seems to show that the bayonet, the scabbard of which is tipped with steel, was not the cause of attracting the lightning. The sentry box, in which Mason was apparently standing at the time of the accident, was splintered, and a tree on the other side of the road was also struck. According to a medical opinion expressed at the inquest this tree had nothing whatever to do with the accident, but the question of removing it and another tree in the vicinity is nevertheless under consideration. I do not think that any further action can usefully be taken.

CHINA STATIONS (OFFICERS' PAY).

Mr. GUY (for Captain PETER MACDONALD): 14.
asked the First Lord of the Admiralty whether any further consideration has now been given to the reduction in the effective pay received by officers of the Royal Navy on the China station, in view of the depreciation of the Chinese dollar in terms of pounds sterling; and whether, in view of the fact that the rates of allowances to Army officers on China stations have been increased on this account, he can state whether equally sympathetic treatment can be accorded to naval officers?

The CIVIL LORD of the ADMIRALTY (Mr. Kenneth Lindsay): A scheme of exchange concession to meet the depreciation of the Chinese dollar was announced by telegram on the 25th May, and is now in operation throughout the area in which the Hong Kong dollar is current. The scheme is designed to compensate for changes in the dollar by paying, in dollars at a standard rate of 2s., that fixed proportion of the pay which is estimated to be spent on the station. The case of military personnel is met by modifying
from time to time the rates of colonial allowance payable on the station, and it is therefore not possible to make any exact comparison between the two systems. I am satisfied, however, that the naval scheme gives fully adequate compensation.

Oral Answers to Questions — ROYAL AIR FORCE.

AEROPLANE HANGARS (EARTHQUAKE RISKS).

Mr. CHORLTON: 16.
asked the Secretary of State for Air whether any special designs for hangars for aeroplane storage have yet been got out to overcome the risks of earthquake disturbance?

The SECRETARY of STATE for AIR (Sir Philip Cunliffe-Lister): So far as the Royal Air Force is concerned, it may be said that the necessity for hangars specially designed to withstand earthquake-shock arises only in India. The responsibility for provision there rests with the Government of India, and experience to date has shown that the steel-framed hangars which have been adopted by that Government are the type best fitted to meet this risk. I may add that steel-framed hangars are in general use in all Air Force commands and not in India only.

Mr. KIRKPATRICK: Will the right hon. Gentleman inquire how it is that the Royal Air Force buildings in Quetta were not earthquake proof?

Sir P. CUNLIFFE-LISTER: That is a rather separate question, and I should prefer to see it on the Paper.

AERODROME SITE, CHURCH FENTON, YORKSHIRE.

Mr. GRANVILLE GIBSON: 17.
asked the Secretary of State for Air whether he is aware that the Air Ministry have decided to purchase at Church Fenton, Yorkshire, for the purpose of a flying school and aerodrome, land on which valuable crops are growing; and why the Ministry cannot make use of land only two miles away which was used as an aerodrome from 1914 to 1919, and on which no crops are growing?

Sir P. CUNLIFFE-LISTER: The Church Fenton site is at once much cheaper and more suitable for present requirements than the land at Sherburn-in-Elmet, previously in use as an aerodrome. The latter site was considered
first, but was found open to serious objections owing to buildings near the boundary. Had it been selected, the purchase would have had to include some 150 acres under crops.

Mr. GIBSON: Is any provision being made for farmers who are being dispossessed of land of which their families have been in possession for generations?

Sir P. CUNLIFFE-LISTER: I am not sure what my hon. Friend means by "provision," and whether he means compensation or alternative land. All that one can do when buying a site is to pay the purchase price and compensation. I shall be very glad, if my hon. Friend will communicate with my Department, to give him all the information available on this subject.

Mr. GIBSON: Is it proposed to grant compensation?

Sir P. CUNLIFFE-LISTER: I would like notice of that question.

FLEET AIR ARM (MARRIAGE ALLOWANCES).

Captain HAROLD BALFOUR: 18.
asked the Secretary of State for Air whether any further concessions are to be made or are under negotiation whereby married Royal Air Force officers serving with the Fleet Air Arm will be able to draw increased allowances; and whether he is satisfied that service at home or abroad in the Fleet Air Arm does not in any way penalise a married officer as compared to continuing his service with the Royal Air Force?

Sir P. CUNLIFFE-LISTER: Certain aspects of this matter are still under consideration, but I am advised generally that, as a result of recent concessions, married officers of the Fleet Air Arm are not penalised. If my hon. and gallant Friend has any specific case in mind, perhaps he will communicate with me.

MARRIED QUARTERS.

Captain BALFOUR: 19.
asked the Secretary of State for Air at how many permanent Royal Air Force home stations officers' and other ranks' married quarters still consist of wooden huntments; and whether it is proposed to replace these by modern brick quarters as part of the works and buildings expansion programme?

Sir P. CUNLIFFE-LISTER: At 15 (out of 65) Royal Air Force stations at home there are still a few wooden married quarters, though the bulk of the married quarters at these stations are now of permanent construction. At eight of the 15 stations replacement by permanent quarters is being taken in hand, and the balance will be dealt with in due course.

AIRCRAFT DESIGN AND MANUFACTURE.

Miss WARD: 21.
asked the Secretary of State for Air whether it is his intention to consider designs for machines submitted by persons outside the present Government suppliers; and whether, in the event of acceptance, any stipulation will be imposed as to the area of manufacture?

Sir P. CUNLIFFE-LISTER: As regards the first part of the question, the Air Ministry will be prepared to consider designs put forward from any responsible source. As regards the second part, I do not think I could give an answer to a hypothetical question on a matter which could only be dealt with in a concrete case in the light of all the circumstances.

Miss WARD: May I have an assurance that, if a concrete case in relation to depressed areas is put forward, it will have the unprejudiced consideration of my right hon. Friend?

Sir P. CUNLIFFE-LISTER: Of course, I will certainly promise to give unprejudiced consideration to any proposal.

INSPECTION.

Mr. PERKINS: 22.
asked the Secretary of State for Air whether he will consider allowing the aircraft industry a bigger share in the inspection of aircraft, with the object of preventing an increase in the staff of the Air Inspection Department?

Sir P. CUNLIFFE-LISTER: It is the policy of the Air Ministry to delegate as much as possible of the work of inspection to the staff of approved firms, the official inspection staff being used mainly for supervision. The question of further delegation is constantly under review.

Mr. MORGAN JONES: May we take it that the Air Ministry still reserves the right to satisfy itself that the product is in accordance with the Air Ministry's specification?

Sir P. CUNLIFFE-LISTER: Of course, inspection is an absolutely vital part of that process.

Mr. PERKINS: 23.
asked the Secretary of State for Air whether it is his intention to increase the number of inspectors in the Air Inspection Department, and, if so, by how many?

Sir P. CUNLIFFE-LISTER: An increase in the inspection staff will be necessary, but I am not in a position to give exact numbers. My hon. Friend may rest assured that the numbers will not exceed the minimum really necessary.

Mr. PERKINS: Is my right hon. Friend aware that at this moment there is a great shortage of highly skilled people in the aircraft manufacturing industry; and does he not realise that to take such people from the aircraft industry into the Air Inspection Department would be to intensify that shortage? Will he not consider the whole situation, with a view to allocating still further responsibility to the manufacturing side of the industry?

Sir P. CUNLIFFE-LISTER: The next question that I have to answer deals with the subject of shortage of labour. It will be absolutely impossible to put the inspection staff below what is really necessary, but I can assure my hon. Friend that I have been into this question with Lord Weir, who has an unrivalled experience in this matter, and what I am saying represents his view as well as my own.

Captain BALFOUR: Will the increase in staff be of a permanent or a temporary nature?

Sir P. CUNLIFFE-LISTER: I should like notice of that question.

Miss WARD: With regard to the question of shortage of labour, will my right hon. Friend consult with the Minister of Labour as to whether it would be possible to start training any people in the depressed areas?

Sir P. CUNLIFFE-LISTER: My answer to the next question will indicate to my hon. Friend that we are in very close touch with the Ministry of Labour on that matter.

Mr. PERKINS: 24.
asked the Secretary of State for Air whether he is aware of the shortage of skilled men in the aircraft
industry; and whether, seeing that any increase in the staff of the Air Inspection Department will increase the shortage, he will look further into the matter?

Sir P. CUNLIFFE-LISTER: My Department is in close touch with the Ministry of Labour, and arrangements are under consideration which will, I hope, help to overcome the difficulty to which my hon. Friend refers.

Mr. THORNE: Will the right hon. Gentleman put himself in communication with the Amalgamated Engineering Union, and find out from them whether there is any shortage?

Mr. BUCHANAN: Is the right hon. Gentleman aware that a large number of trades are affected, and will he put himself in touch with the official organisations that speak for them, and who could help him in this direction?

Sir P. CUNLIFFE-LISTER: The Ministry of Labour are very expert in all these matters, and I thought that the most practical thing I could do was to ensure that the liaison between my Department and the Ministry of Labour was complete.

Mr. KIRKWOOD: Is not the right hon. Gentleman aware that the President of the Amalgamated Engineering Union, which I represent, has stated time and again that there is no shortage of skilled labour? The difficulty is that the wages are too low for men who are to be uprooted from their homes and taken all over the place with no guarantee that they are going to be constantly employed.

Sir P. CUNLIFFE-LISTER: I was under the impression that my hon. Friend represented Dumbarton Burghs—

Mr. KIRKWOOD: So I do, and if you represent your constituency as well as I do mine, you will do well.

Mr. LAWSON: Could the right hon. Gentleman indicate the districts in which there is a shortage of skilled labour, as that statement is often being made, and there are many people who doubt its reality?

Sir P. CUNLIFFE-LISTER: I have not made any statement beyond the statement that my Department and the Ministry of Labour are in the closest and
most constant touch, in order to see that every labour vacancy of any kind is filled to the best possible advantage.

Mr. LAWSON: Has the Air Ministry had any real experience of a shortage of skilled labour?

Mr. SPEAKER: That question does not arise.

Oral Answers to Questions — AVIATION (AIRCRAFT INSURANCE).

Captain BALFOUR: 20.
asked the Secretary of State for Air when he proposes to bring into force the recommendation of the Gorell Committee regarding compulsory third-party insurance for private aircraft?

Sir P. CUNLIFFE-LISTER: As my hon. and gallant Friend is aware this particular recommendation, which the Air Council have accepted, involves legislation. The necessary amendment for this purpose of the Air Navigation Act of 1920 has been drafted, and I hope that it will be possible to introduce the Bill, which includes also a number of other amendments, early in the next Session.

Oral Answers to Questions — TRANSPORT.

WEAK BRIDGES (RECONSTRUCTION).

Mr. HERBERT WILLIAMS: 29.
asked the Minister of Transport what progress is being made on the reconstruction of weak bridges?

The MINISTER of TRANSPORT (Mr. Hore-Belisha): During the last two financial years schemes for the reconstruction of 129 bridges in private ownership were approved for grant. During the current financial year I have already been advised of schemes for the reconstruction of 242 other bridges, which are to be put in hand during the current financial year.

Mr. HENDERSON STEWART: Has the Minister any figures to show the total number of such bridges that need improvement and ought to be improved?

Mr. HORE-BELISHA: I am always ready to give such particulars as I have.

Mr. THORNE: Could not the right hon. Gentleman have done a good deal
more if it had not been for the Chancellor of the Exchequer "pinching" £5,000,000 from the Road Fund?

Mr. EVERARD: Will my right hon. Friend take into consideration the repairs necessary to railway canal bridges in country districts?

Mr. SPEAKER: That is a different question.

Mr. A. BEVAN: Do the schemes involve, not merely the reconstruction or reinforcement, but the widening of bridges?

Mr. HORE-BELISHA: Yes, Sir, in some cases they do.

STREET LIGHTING.

Mr. H. WILLIAMS: 30.
asked the Minister of Transport when the report of the Committee on street lighting will be published?

Mr. HORE-BELISHA: I understand that the Departmental Committee on Street Lighting expect to make an interim report by the end of next month.

ROAD EXPENDITURE.

Mr. H. WILLIAMS: 31.
asked the Minister of Transport the estimated expenditure during the present financial year of the Road Fund on capital works and maintenance, respectively?

Mr. HORE-BELISHA: The payments out of the Road Fund during the current financial year in respect of grants to highway authorities for the maintenance and minor improvement of classified roads in county areas are estimated to amount to £7,600,000. As regards major works of improvement and new construction, pending the receipt and examination of the five years' programmes which highway authorities have been invited to submit, it is not possible to estimate the amount to be paid out of the Fund during the year in respect of such schemes.

Mr. DUNCAN GRAHAM: 37.
asked the Minister of Transport whether he will state the total amounts spent on road construction in the counties of Ayr, Dumbarton, Lanark, and Renfrew, separately, for each year from 1929 to 1934?

Mr. HORE-BELISHA: As the answer contains a number of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

The amounts spent on new construction of roads and bridges by local authorities in the Counties of Ayr, Dumbarton, Lanark and Renfrew during each of the years ended on the 15th May, 1931, 1932, 1933 and 1934, respectively, were as follows (comparable figures for the financial year 1929–30 are not available):

County.
Years ended 15th May.


1931.
1932.
1933.
1934.



£
£
£
£


Ayr
48,774
86,837
24,450
12,600


Dumbarton
29,656
28,762
15,290
14,115


Lanark
119,479
260,688
144,035
64,688


Renfrew
1,950
2,755
264
39

The above amounts are exclusive of administration expenses.

Mr. GRAHAM: 38.
asked the Minister of Transport the total amounts spent on road construction in Scotland for each year from 1929 to 1934?

Mr. HORE-BELISHA: The amounts spent by highway authorities in Scotland on new construction of roads and bridges during each of the three years ended on the 15th May, 1931, 1932, and 1933, were approximately £647,000, £1,106,000 and £632,000 respectively. These amounts are exclusive of administration expenses. Comparable particulars are not available for the financial year 1929–30, and those for the financial year 1933–34 will be published in the Road Fund Report.

Mr. GORDON MACDONALD (for Mr. PARKINSON): 26.
asked the Minister of Transport the total amount spent on new arterial roads since 1931, and the number of miles constructed?

Mr. HORE-BELISHA: Expenditure on arterial roads is not separately recorded, but the hon. Member will find information as to the expenditure on the construction of new classified roads and bridges in the annual reports on the administration of the Road Fund.

RAILWAY ELECTRIFICATION.

Sir ARTHUR SHIRLEY BENN: 32.
asked the Minister of Transport whether he will invite the London Midland and Scottish and the London and North
Eastern Railway Companies to initiate a joint investigation of their lines in the West Riding, North Derbyshire, and North Nottinghamshire, with a view to early conversion under a similar guarantee to that just promised by the Government in the London transport area?

Mr. HORE-BELISHA: I have been in communication with the two railway companies mentioned, and am informed that as regards the West Riding of Yorkshire a joint examination is being made by them of the possibilities of railway electrification, but as regards Nottinghamshire and Derbyshire, it is considered that these areas do not afford scope for any remunerative scheme of this nature. The initiative for submitting schemes for the consideration of His Majesty's Government naturally rests with the undertakings concerned.

Mr. CHORLTON: Does the Minister's reply refer also to the South Lancashire area? A fortnight or three weeks ago the Minister answered that question by saying that there was no such scheme going on.

Mr. HORE-BELISHA: The question on the Paper refers to the West Riding of Yorkshire, North Derbyshire, and North Nottinghamshire.

RAILWAY LEVEL CROSSING.

Brigadier-General NATION: 34.
asked the Minister of Transport whether he proposes to ask local authorities to submit schemes for the abolition of level crossings; and, if so, whether any financial grants will be made towards the cost of the work?

Mr. HORE-BELISHA: Yes, Sir. I have reminded highway authorities that I am prepared to entertain applications for grants up to 75 per cent. of the net cost falling upon them of constructing bridges in lieu of level crossings.

Sir A. M. SAMUEL: Will the Minister of Transport consider making it a condition of the Treasury guarantee that, where there are level crossings on existing railway routes which are to be electrified, they shall be abolished?

Mr. HORE-BELISHA: I would like an opportunity to consider that question when I have read it.

BUILT-UP AREAS (SPEED LIMIT).

Mr. GLEDHILL: 35.
asked the Minister of Transport whether he will assist motor drivers to carry out the speed limit regulations by urging upon local authorities the need for the erection of proper speed limit and de-restriction signs?

Mr. HORE-BELISHA: I do not cease to press on local authorities the urgent necessity of remedying any defects that may still exist in the areas in question.

Mr. LEVY: Is my right hon. Friend aware that a number of motorists are being prosecuted for exceeding the speed limit upon roads where no signs exist at all, and does he consider that that is in accordance with the principle of justice in this country?

Mr. HORE-BELISHA: I was not aware of that fact.

Mr. McENTEE: 61.
asked the Secretary of State for the Home Department the number of persons, male and female, that have been summoned for exceeding the 30-miles-per-hour speed limit in the Metropolitan area since the 18th March; the number that have been convicted in each case; and the total amount of fines?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Captain Euan Wallace): The total number of cases heard between 18th March and 31st May was 5,829. In 5,721 cases the Court found the charge proved. In 585 of these cases the defendant was dealt with under the Probation of Offenders Act, and in the remaining 5,136 cases fines were imposed amounting to £5,683. Separate figures for men and women are not available.

PEDESTRIAN CROSSING-PLACES.

Mr. GLEDHILL: 36.
asked the Minister of Transport whether, in order to save confusion, he will remove the pedestrian crossing beacons at places where traffic light systems are installed?

Mr. HORE-BELISHA: I am not aware that any confusion has arisen but I will willingly investigate any particular case which my hon. Friend has in mind.

Mr. H. WILLIAMS: Will the right hon. Gentleman consider the point that a pedestrian arriving at a crossing marked with studs imagines it to be a safe place at which to cross and, therefore, is inclined to neglect the protection of the
police or lights, and, in these circumstances, will he have crossings marked only at places where there is no other means of control?

Mr. HORE-BELISHA: There must be places where the police are on duty at certain hours of the day and not at certain other hours, and, therefore, it would be difficult to take up the studs during the periods that the police were there.

Mr. G. MACDONALD (for Mr. PARKINSON): 25.
asked the Minister of Transport whether his attention has been drawn to the scant attention paid by motorists at the recognised crossing-places for pedestrians; and whether, in view of the large number of accidents at these crossings, he proposes to take further steps to safeguard the rights of pedestrians?

Mr. HORE-BELISHA: I think that the hon. Gentleman's assumption is too wide, but I agree that there is room for improvement in the observance of the crossings by all concerned. I hope that drivers and pedestrians alike will progressively realise that the crossings, being laid down for their mutual benefit, should for the common advantage be invariably respected.

Captain Sir WILLIAM BRASS: Will the Minister of Transport communicate with the Home Secretary on this point?

Mr. HORE-BELISHA: Yes, Sir. A question of the enforcement of the law is entirely for my right hon. Friend.

DEVELOPMENT SCHEMES.

Mr. H. STEWART: 39.
asked the Minister of Transport the results to date of his invitation to local authorities to submit schemes of five-year transport development; to what extent the authorities in England and Wales and Scotland are responding; and what are the principal types of developments which they propose?

Mr. HORE-BELISHA: I have so far received programmes of work proposed to be put in hand during the next five years from 52 counties, 56 county boroughs and nine large burghs in Scotland. The programmes include improvement of existing roads and the construction of new roads and by-passes, and the reconstruction of weak bridges.

Mr. STEWART: Is the right hon. Gentleman satisfied with the response to the invitation and with the character of the schemes suggested?

Mr. HORE-BELISHA: I cannot say that my satisfaction would extend to the programme of every local authority. It certainly does to some, and I think that the programme as a whole will meet with the approval of the House, and that it will be larger than any previous programme undertaken in a similar period.

Mr. STEWART: Does the right hon. Gentleman propose, in case of a response which he does not regard as satisfactory, to urge the authorities to extend their proposals?

Mr. HORE-BELISHA: Certainly.

HIGHWAY CODE (WELSH EDITION).

Mr. LLEWELLYN-JONES: 40.
asked the Minister of Transport whether, having regard to the fact that many drivers of vehicles and other users of the roads in the principality of Wales are ignorant of the English language, he will consider the desirability of publishing an edition of the Highway Code in the Welsh language?

Mr. HORE-BELISHA: Yes, Sir.

ACCIDENTS (POLICE CARS).

Mr. McENTEE: 60.
asked the Hone Secretary the number and nature of the accidents in which police cars have been involved during the past 12 months in the Metropolitan police area?

Captain WALLACE: Metropolitan police vehicles were involved in 1,188 accidents during the 12 months ending 31st May, 1935. The great majority of these accidents were of an entirely trivial nature, such as scratched mudguards, etc., and over 92 per cent. involved no personal injuries.

Mr. McENTEE: Can the hon. and gallant Member say which mudguard was damaged?

Captain WALLACE: Sometimes one and sometimes the other.

Captian BALFOUR: Can my hon. Friend say how many police vehicles there are?

Captian WALLACE: Not without notice.

MOTOR DRIVING TEST.

Mr. G. MACDONALD (for Mr. PARKINSON): 27.
asked the Minister of Transport the number of men and women that have been examined for the new driving test, and the number that have failed, giving separate figures for men and women?

Mr. HORE-BELISHA: Up to and including 15th June, 50,712 persons have been examined, of whom 5,036 failed to satisfy the examiners. From 6th May, since when separate records for men and women have been kept, to 15th June the figures are:

Failed.


Men examined
…
19,459
1,989


Women examined
…
4,542
730

AUTOMATIC SIGNALS.

Mr. McENTEE: 28.
asked the Minister of Transport whether the new automatic signals for pedestrians which have been fitted to existing traffic-light standards in Trafalgar Square have been a success; and whether it is proposed to extend the system?

Mr. HORE-BELISHA: I am not satisfied with the experiment at Trafalgar Square, and while it may be desirable to try out similar signals in other localities with a view to obtaining more experience, I should not, as at present advised, be prepared to extend the system generally.

Sir W. BRASS: Will the Minister of Transport consider another experiment, of putting the lights down on the stem of the standards instead of at the height at which they are now in Trafalgar Square?

Mr. HORE-BELISHA: I am most willing and anxious to try these experiments, and I will take the hon. and gallant Member's suggestion into review.

LONDON PASSENGER TRANSPORT BOARD.

Mr. WEST: 33.
asked the Minister of Transport how many persons were employed by the London Passenger Transport Board on its formation; and how many are now employed?

Mr. HORE-BELISHA: I am informed by the London Passenger Transport Board that, exclusive of railwaymen employed on joint lines, the total number of staff employed when it began operations was 70,500, and that at the 18th May, 1935,
the total was 76,802. A number of additional undertakings have been transferred to the Board since it first began operations.

Oral Answers to Questions — BATTLEFIELD OF CULLODEN.

Mr. LOVAT-FRASER: 41.
asked the First Commissioner of Works whether he is aware that a steam-roller and a steam tar-spraying machine have been working on the battlefield of Culloden, and that the latter has been spraying tar which has spread on to the graves; and whether he will take steps to schedule this site as an ancient monument and so prevent such desecration?

The FIRST COMMISSIONER of WORKS (Mr. Ormsby-Gore): I understand that the carriage way was widened by the local authority two feet during March and April of this year, but, as the result of an inspection of the road yesterday by a member of the county surveyor's staff, the divisional road engineer of the Ministry of Transport has been informed that there is no evidence of tar having been sprayed outside the limits of the carriage way. Those portions of the battlefield known as the graves of the dead are already scheduled under the Ancient Monuments Act, and I can hardly believe that the highway authority would have done anything without the matter having been reported to me.

Oral Answers to Questions — TRADE AND COMMERCE.

ANGLO-BRAZILIAN PAYMENTS AGREEMENT.

Mr. BURNETT: 43.
asked the President of the Board of Trade whether, seeing that Brazil does not honour her debt obligations raised in London by public subscription, and as the conference of 27th March had the object of obtaining payment for British exports to Brazil, he will now discuss Anglo-Brazilian trade on the basis that British exports to Brazil have been gifts to Brazil and constitute losses of British savings; and will he discourage exports to Brazil except against cash or its equivalent?

Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department): The Anglo-Brazilian Payments Agreement of 27th March provides for payments of all outstanding commercial goods. Goods
imported after 11th February last are paid for by the purchase of exchange on the free market, and I am informed that few, if any, complaints are being reseived with regard to payment for current trade. I should be reluctant to discourage exporters from taking steps, within the limits of ordinary commercial prudence, to maintain their place in what is normally a valuable market.

GERMAN EXPORTS.

Mr. GIBSON: 49.
asked the President of the Board of Trade if he has considered the examples submitted to him of the effect of the subsidisation of industry in respect of German exports to this country and the effect upon our export trade to foreign countries; and what steps, if any, he proposes to take in the matter?

Lieut.-Colonel COLVILLE: As was stated in reply to the hon. and learned Member for Argyll (Mr. Macquisten) on 3rd May, there is at present no reason to think that the home market cannot be adequately protected under existing powers. As regards competition in third markets, my hon. Friend will appreciate the difficulty of taking effective steps.

Mr. GIBSON: Is my hon. and gallant Friend aware of the fact that very large orders for schemes and goods have been obtained by Germany as a result of the subsidy?

Lieut.-Colonel COLVILLE: Certain information has been sent to the Board of Trade in that connection and is being examined, but in general the export trade of this country has made more rapid progress than the export trade of the country in question.

EXPORTS.

Mr. GIBSON (for Mr. PIKE): 44.
asked the President of the Board of Trade the increased value of British exports to the latest available date in respect to the following countries: Sweden, Finland, Norway, Iceland, Denmark, Germany, the Argentine, and any other country with which trade agreements have been concluded since December, 1933?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): As the answer in is the form of a tabular statement, I will circulate it in the OFFICIAL REPORT.

Mr. T. WILLIAMS: May I ask whether the comparative figures will merely be figures for the year subsequent to the trade agreements or from the year 1931 to the year subsequent to the operation of the trade agreements?

Dr. BURGIN: The figures given in answer to the question will be those for

The following table shows the total declared value of the exports of the produce and manufactures of the United Kingdom registered during the undermentioned periods as consigned to the countries specified, with which agreements were concluded up to the end of last year.


Country to which consigned.
Date on which Agreement came into operation.
Six months ended March.


1933.
1934.
1935.






£'000
£'000
£'000


Germany

8th May, 1933
…
7,617
8,112
9,825


1st November, 1934
…


Denmark
…
20th June, 1933
…
5,699
6,249
7,340


Iceland
…
28th June, 1933
…
242
260
253


Norway
…
7th July, 1933
…
2,681
3,260
3,150


Sweden
…
7th July, 1933
…
3,356
4,205
4,623


Argentine Republic
…
8th November, 1933
…
5,910
6,535
7,451


Finland
…
23rd November, 1933
…
1,125
1,593
1,896


Soviet Union
…
21st March, 1934 (a)
…
3,489
1,243
1,620


France
…
1st July, 1934
…

9,229
8,430


Netherlands
…
1st August, 1934
…

6,700
5,787


Lithuania
…
12th August, 1934
…

385
614


Estonia
…
8th September, 1934
…

176
293


Latvia
…
12th October, 1934
…

498
516


(a) The balance of payments was regulated as from 1st January, 1934.


NOTE.—The agreements with some of the above countries, e.g., France, the Netherlands, and the first of the two agreements with Germany were more limited in application than the others.

Oral Answers to Questions — UNEMPLOYMENT.

DISTRESSED AREAS.

Mr. BATEY: 45.
asked the Prime Minister what further steps the Government propose to take to deal with the distressed areas?

The PRIME MINISTER (Mr. Baldwin): I have no further statement to make at present.

Mr. BATEY: Are we to understand from that reply that the Government are not in a hurry to do anything for the distressed areas?

The PRIME MINISTER: No.

PUBLIC ASSISTANCE.

Miss WARD: 68.
asked the Minister of Labour whether his attention has been drawn to the case of W. D. Bell, of

which the question asks. As the question asks for the latest available figures, those will be the figures given.

Mr. LOFTUS: Will the figures also include the export of cattle.

Mr. SPEAKER: The hon. Member must wait and see.

Following is the statement:

Willington Quay, Northumberland, whose portion of Army Reserve pay due during the period he was on standard benefit has been taken into consideration by the Unemployment Assistance Board; and whether this policy has the approval of the Ministry of Labour?

The MINISTER of LABOUR (Mr. Ernest Brown): I would remind my hon. Friend that the responsibility for dealing with individual cases rests with the Unemployment Assistance Board, subject to the statutory rights of appeal. The basis on which the Board deal with Army Reserve Pay is set out in the Appendix to Command Paper 4791. I am informed by the Board that if any case has special circumstances they are taken into account, and I would point out further that the allowance cannot in any case be
less than the amount which the applicant would receive by way of transitional payments.

Miss WARD: May I ask for an assurance that the principle contained in my question will be considered before the new regulations are introduced into the House? As it stands at present, the man's Army Reserve pay was taken into consideration while he was on standard benefit. It does not relate to the period when he is on transitional payment.

Mr. BROWN: It relates to transitional payments which vary in different parts of the country.

Mr. BUCHANAN: Is it legal for the board to take into account any sum received in income when the man was on standard benefit? Is it not the practice of the board only to take into account such sums as are due after the transitional period has started?

Mr. BROWN: I cannot answer that question by way of a supplementary. There is a long series of propositions involved. If my hon. Friend will put the question down, I will answer it.

Mr. BUCHANAN: Have the board any right to take into account the income which was due while the man was on standard benefit? Have they the right to interfere with the man's income during the standard benefit period?

Mr. BROWN: This has to do with Army Reserve pay.

Mr. BUCHANAN: On that point the question is, have the board any right to inquire into the question of the man receiving pay during the time that he is in receipt of standard benefit? Have they any right to include that income during his standard benefit period?

Mr. BROWN: I cannot answer the question in that simple form. If the hon. Member will put it down in that form, I will give him an answer, with all the propositions in mind.

Mr. T. SMITH: Is the Minister aware that the latter part of the question asks whether this policy has the approval of the Ministry of Labour? Are we to take it that this question has not been considered?

Mr. BROWN: This is a matter for the board, subject to the statutory right of appeal.

RELIEF WORK.

Mr. H. STEWART: 69.
asked the Minister of Labour what is the Government's attitude to the proposal to pay to local authorities the equivalent of part of the transitional payment in respect of every unemployed man in receipt of such benefit who is given work by the local authorities on approved schemes and under approved conditions of employment?

The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Lieut.-Colonel Muirhead): Proposals of this kind have been considered on a number of occasions and have always been rejected on account of the dangers apprehended from the subsidising of wage rates out of funds provided for the relief of unemployment. I do not know what particular proposal my hon. Friend has in mind, and I may say that I am not aware of any proposal of this kind which is free from the objection I have indicated, but my right hon. Friend will be glad to discuss the matter with him if he so desires.

Mr. STEWART: Is the hon. and gallant Member aware that there are many local authorities who, if given assistance of this kind, could carry out urgent and useful works which would employ numbers of idle men, and would not be open to the objection to which he has referred?

Lieut.-Colonel MUIRHEAD: If the hon. Member will give specific cases my right hon. Friend will look into them.

ANOMALIES REGULATIONS.

Mr. McGOVERN: 66.
asked the Minister of Labour whether he can state the total number of persons who have been deprived of benefit by the Anomalies Act, 1931, since it became law, up to the latest date?

Mr. E. BROWN: Between 13th October, 1931, and 31st May, 1935, 379,776 claims were disallowed under the anomalies regulations by courts of referees in Great Britain. This figure relates to the total number of claims disallowed; statistics are not available as to the number of separate individuals concerned.

Mr. T. WILLIAMS: Were the regulations referred to in that reply regulations which were passed by the National Government?

Mr. BROWN: The hon. Member had better put that question on Paper.

Mr. WILLIAMS: May we not secure from the Minister a reply which he actually knows without having any notice given—whether the regulations referred to in that reply are the regulations passed by the National Government?

Mr. BROWN: The Anomalies Act was passed by the Labour Government.

Mr. BUCHANAN: These people have been disallowed under the Act without Parliament being consulted, and have any steps been taken to see that they are granted any kind of benefit at all?

Mr. BROWN: The hon. Member knows that the seasonal workers' case is under consideration by the Unemployment Insurance Statutory Committee.

Captain BALFOUR: How many of these people are seasonal workers?

Mr. BROWN: 83,863.

Mr. CURRY: Can the Minister state roughly the main causes of these disallowances?

Mr. SPEAKER: We cannot debate the matter now.

Oral Answers to Questions — LEAGUE OF NATIONS (BRITISH DELEGATION).

Mr. MANDER: 47.
asked the Prime Minister who will compose the British delegation to the meeting of the Assembly of the League of Nations this year; and whether he will consider the advisability, in view of the seriousness of the international situation, of himself leading it for a period?

The PRIME MINISTER: I hope to be in a position to make an announcement shortly.

Mr. MANDER: May I ask whether the suggestion made in the question will be considered?

The PRIME MINISTER: Any suggestion made by the hon. Member will be considered.

Oral Answers to Questions — JAMES AND SHAKESPEARE, LIMITED (LIQUIDATION).

Major NATHAN: 50.
asked the President of the Board of Trade the present position of the liquidation of James and Shakespeare, Limited?

Dr. BURGIN: Sir William McLintock was appointed Liquidator by order of the Court on the 8th April. A summary of the Statement of Affairs of the Company, together with the Senior Official Receiver's observations thereon, will be issued shortly and the Senior Official Receiver hopes to have completed his investigations at an early date.

Oral Answers to Questions — MERCANTILE MARINE (LINE THROWING APPARATUS).

Mr. N. MACLEAN: 51.
asked the President of the Board of Trade whether he has given consideration to the proposal that he should require all vessels, including fishing vessels, to be equipped with line-throwing apparatus; and when be proposes to take action in the matter?

Dr. BURGIN: The present statutory rules require that all sea-going vessels of 500 tons gross or over, except fishing boats, and all passenger ships, whatever their tonnage, engaged on international voyages, shall carry line-throwing apparatus. The information available does not suggest that any extension of these requirements is necessary.

Mr. MACLEAN: In view of the loss of life in connection with these fishing vessels during the past winter, and the spring of this year, does not the President of the Board of Trade consider that some alteration in the statutory law is now necessary?

Dr. BURGIN: As the hon. Member himself appreciates by the supplementary question, there could not in any case be an application of this rule to fishing boats without legislation. The whole matter of this line-throwing apparatus is constantly under consideration, and I will bring what the hon. Member has said to the notice of the President of the Board of Trade.

Mr. MACLEAN: Will the hon. Gentleman bring it to the notice of the President of the Board of Trade before next winter comes in and try and save a few lives?

Mr. H. WILLIAMS: Is it not the case that the Act was promoted by Mr. Ammon, formerly Member for Camberwell, who investigated all these matters very carefully indeed before he brought the Bill forward?

Oral Answers to Questions — BRITISH ARMY.

UNIFORM.

Brigadier-General NATION: 54.
asked the Financial Secretary to the War Office whether a decision has been reached as to the adoption or otherwise of the test uniform for the Army?

The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Douglas Hacking): No, Sir. No decision has yet been taken.

Brigadier-General NATION: May I take it that there is no possibility of this unsightly uniform being abandoned?

Mr. HACKING: No decision has yet been taken. I cannot give any more information than that.

TOWER OF LONDON (YEOMAN WARDERS).

Mr. N. MACLEAN: 55.
asked the Financial Secretary to the War Office whether he has concluded his investigation into the rates of pay of the yeoman warders of the Tower of London; and whether he can say if it has been decided to grant these warders increases of pay and, if so, how much the proposed increases will be?

Mr. HACKING: No, Sir. The investigations are still proceeding.

Mr. MACLEAN: Can the right hon. Gentleman say when they are likely to terminate?

Mr. HACKING: My right hon. Friend the Secretary of State is in communication on the matter at the present moment, and no time is being lost.

Oral Answers to Questions — WATER SUPPLIES (RESERVOIRS).

Brigadier-General NATION: 56.
asked the Minister of Health whether he will consider plans for the construction of reservoirs submitted to him by local authorities; and, if so, whether they will receive financial assistance from the Government?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Shakespeare): My right hon. Friend is
always prepared to consider plans for the construction of reservoirs in connection with schemes of water supply, but he has no funds at his disposal for grants except where the scheme is for a rural locality under the Rural Water Supplies Act, 1934.

Oral Answers to Questions — NATIONAL HEALTH INSURANCE (STATISTICS).

Mr. LLEWELLYN-JONES: 57.
asked the Minister of Health the number of insured persons on the registers of the National Health Insurance committees for the county boroughs of Bootle, Warrington and Wallasey, and the salaries paid to the clerks of each of these committees; and whether he will give the same information as to the counties of Caernarvon, Denbigh and Flint?

Mr. SHAKESPEARE: As the answer contains a number of figures I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Following are the figures:


Insurance Committee.
Number of insured persons on the 1st January, 1935.
Salary of Clerk.


Bootle
30,755
£420 a year


Warrington
35,481
£420 a year


Wallasey
32,740
£420 a year


Caernarvonshire
42,663
£393 a year


Denbighshire
56,539
£393 a year


Flintshire
41,949
£393 a year

Oral Answers to Questions — COAL INDUSTRY.

QUOTA SYSTEM.

Sir WALDRON SMITHERS: 58.
asked the Secretary for Mines the quantities of quota that have been sold by colliery companies in each of the districts operating schemes since the schemes came into force under the 1931 Act, and the amount of money that has been paid for these quotas?

The SECRETARY for MINES (Captain Crookshank): I regret that the information asked for is not available in my Department.

Sir W. SMITHERS: May I congratulate my hon. and gallant Friend on his appointment?

Mr. BATEY: Can the Minister not try to get the information?

MINES ACT (FOLKEINS MINE, WILSONTOWN).

Mr. DUNCAN GRAHAM: 59.
asked the Secretary for Mines whether he is aware of complaints being made to the mines inspector of breaches of the Mines Act, at Folkens Mine, Wilsontown, Lanarkshire; whether any inquiry has been made; and what action his Department proposes to take in the matter?

Captain CROOKSHANK: I presume the hon. Member refers to allegations made in regard to recent events at Folkens Mine, which resulted in the dismissal of a fireman from the colliery. If so, I cannot say more at present than that I am having the alleged breaches of the law investigated.

Oral Answers to Questions — IMPORT DUTIES ACT.

Mr. GLEDHILL: 63.
asked the Chancellor of the Exchequer whether he is satisfied with the working of Section 15c in the Import Duties Act; and whether it is proposed to retain this Clause in preference to duties on domestic value?

The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): I am advised that little use has been made of Section 15 (2) (c) of the Import Duties Act. The whole of the subsection is repealed by Clause 10 of the Finance Bill at present before Committee.

Oral Answers to Questions — FINANCE BILL (CUSTOMS VALUATION).

Major NATHAN: 64.
asked the Chancellor of the Exchequer from what organisations he has received representations against the provisions of Clause 10 and/or 15 of the Finance Bill?

Mr. COOPER: I have received representations from a few organisations against these Clauses. I may add that I have also received several representations in the opposite sense.

Major NATHAN: Will my hon. Friend state what organisations are protesting against the provisions of these Clauses?

Mr. COOPER: I think it will be hardly fair without consulting them to mention their names, because I do not know
whether they hold the same view after receiving the letter that I wrote to them on the subject and my statement in the Debate last night.

Oral Answers to Questions — TAX OFFICE, MOLD.

Mr. LLEWELLYN-JONES: 65.
asked the Financial Secretary to the Treasury whether the removal of the offices of the Inspector of Income Tax from Mold to Chester is under consideration; and whether, having regard to the inconvenience which will be experienced by large numbers of taxpayers in Flintshire if the offices are removed from the county, he will take steps to obtain the views of local authorities and representative persons in the district before coming to a final decision?

Mr. COOPER: The removal of the office of the Inspector of Taxes at Mold to Chester is under consideration and any representations which the local authorities or representative bodies wish to make will be carefully considered.

Mr. LLEWELLYN-JONES: Is the Minister aware that the office was removed from Chester to Mold because of the representations of a large number of taxpayers about inconvenience, and, having regard to the fact that it is the smaller taxpayer who will be penalised by the removal, will the hon. Member consider the advisability of retaining the office at Mold?

Mr. COOPER: That consideration will certainly be borne in mind.

Mr. G. GRIFFITHS: Is the Minister aware that the removal of the office is from one country to another, from Wales to England?

Oral Answers to Questions — HOURS OF WORK (REDUCTION).

Mr. THORNE: 67.
asked the Minister of Labour whether the votes of the Government's delegate to the International Labour Office Conference at Geneva against the introduction of a 40-hours working week without reduction in pay and against the appointment of a committee to investigate the proposal, were given on the instruction of the Government?

Mr. E. BROWN: I cannot identify any votes cast at the conference by the
British Government delegates which correspond with the description given by the hon. Member. I would point out, however, that as is stated in the published record of the proceedings of 5th June the conference, without taking a vote, decided to set up a committee to consider the question of hours of work. One of the delegates representing His Majesty's Government has been serving on this committee which sat as recently as yesterday preparatory to making a report to the conference. When this report is available and has been dealt with by the conference, I shall be pleased to explain to the hon. Member any point which he wishes to raise regarding the policy of His Majesty's Government as carried out by its representatives at Geneva throughout the complicated series of discussions which have been proceeding there.

Mr. T. WILLIAMS: Is it not the case that the Government's representatives throughout the whole of the debates have opposed any 40-hour Convention or any progress in that direction?

Mr. BROWN: The hon. Member had better put that question on the Order Paper in that form, and I will give him an answer.

Sir PERCY HARRIS: Has the Government's representative any discretion as to the way he votes according to the discussion that takes place?

Mr. BROWN: I cannot answer a general question of that kind.

Mr. KIRKWOOD: Is it or is it not the policy of the Government to support a 40-hour week?

Mr. SPEAKER: We are getting beyond the question on the Order Paper.

Oral Answers to Questions — COMPANIES ACT.

Mr. H. WILLIAMS (for Sir JOHN POWER): 42.
asked the President of the Board of Trade how many representations he has received on the subject of suggested amendments to the Companies Act; and whether he has yet decided that the time is now ripe to appoint a committee to consider the problem?

Dr. BURGIN: As regards the first part of the question, I can only say that many
suggestions of varying importance and from various sources have been received since the Act was passed. Each representation made has been noted for examination in due course, but my right hon. Friend is not satisfied that the time is ripe for the appointment of a committee to consider the problem.

Oral Answers to Questions — BRITISH SHIPPING (ASSISTANCE) ACT.

Miss WARD: 48.
asked the President of the Board of Trade whether complete observance of all National Maritime Board's agreements is being regarded as a condition precedent to the granting of a subsidy under the tramp shipping scheme?

Dr. BURGIN: My right hon. Friend considers that compliance with obligations arising out of operative agreements of the National Maritime Board must be a condition of payment of subsidy under the British Shipping (Assistance) Act.

Oral Answers to Questions — NAVAL AND MILITARY PENSIONS AND GRANTS.

Mr. GUY (for Mr. MILNE): 52.
asked the Minister of Pensions whether he will reconsider the case of Mr. James Adam, Cardenden, Fife, whose disability has materially increased since 1932, when an award was made to him by the Ministry, and who accepted the award in ignorance of the fact that metallic fragments were present in his leg, a fact which was then known to the Ministry but was not disclosed to Mr. Adam?

The MINISTER of PENSIONS (Mr. R. S. Hudson): I find that this case has been repeatedly considered by my predecessor and that no ground could be found for the award of any further compensation.

Mr. GUY: Does the hon. Member consider that an award of £150 to a man who is now unfit to carry out his work is an adequate award?

Oral Answers to Questions — SCOTLAND (STEEL HOUSES).

Mr. BUCHANAN (for Mr. McGOVERN): 53.
asked the Secretary of State for Scotland the number of steel houses built in each scheme, the amount of rent drawn in each scheme from the
date of completion, the expenditure for each year, the total amount of deficit or surplus in each scheme, and the amounts which have been repaid towards capital expenditure of building?

The UNDER-SECRETARY of STATE for SCOTLAND (Mr. Skelton): I am sending the hon. Member a tabular statement containing the information asked for.

Oral Answers to Questions — LAW OFFICERS OF THE CROWN (FEES).

Mr. BUCHANAN (for Mr. McGOVERN): 62.
asked the Chancellor of the Exchequer the total amount of money paid in fees to the Attorney-General and Solicitor-General, respectively, for the period August, 1931, to June, 1935?

Mr. COOPER: The total fees paid to the various holders of these posts between the 1st August, 1931, and the 31st May, 1935, were as follow:

Mr. MACQUISTEN: As a matter of fact, does not the Chancellor of the Exchequer take back about half of it in Income Tax and Super-tax?

BUSINESS OF THE HOUSE.

Mr. LANSBURY: Would the Prime Minister state how far he proposes to go to-night?

The PRIME MINISTER: It is always difficult, on a Finance Bill, to say how far we shall go. We hope to make good progress, and we are particularly anxious to get also the Additional Import Duties Order, No. 14. I suggest that later in the day, when we see how we are getting on, we can consult through the usual channels, and I have no doubt that an arrangement will be made that we shall not sit up too late. No one wishes to sit up too late, but we do desire, good progress to be made.

Mr. LANSBURY: Anyone who watched the proceedings and took account of the amount of business got through yesterday would agree that there was no waste of time. We sat until 12 o'clock. Thank goodness I was not here. Twelve o'clock is rather late, and we would rather go home at 11 o'clock to-night. With regard to the marble Order, we do not propose to keep the Government on that, for we do not attach very much importance to it.

MESSAGE FROM THE LORDS.

That they have passed a Bill, intituled, "An Act to repeal the proviso to Section nineteen of the Defence Act, 1842." [Defence (Barracks) Bill [Lords.]

Water Resources and Supplies,—That they have appointed a Committee consisting of Seven Lords to join with a Committee of the Commons to consider and report on measures for the better conservation and organisation of Water Resources and Supplies in England and Wales, pursuant to the Commons Message of Monday last.

Refreshment Rooms and Lavatories,—That they propose that the Joint Committee appointed to consider and report on the subject of Refreshment Rooms and Lavatories in the Palace of Westminster do meet in the Chairman of Committees' Committee Room, House of Lords, on Wednesday next, at Eleven o'clock.

DEFENCE (BARRACKS) BILL [Lords].

Read the First time; to be read a Second time To-morrow, and to be printed. [Bill 83.]

REFRESHMENT ROOALS AND LAVATORIES.

Lords Message considered.

Ordered, That the Committee appointed by this House do meet the Lords Committee as proposed by their Lordships.—(Sir G. Penny.)

Message to the Lords to acquaint them therewith.

Orders of the Day — FINANCE BILL.

Considered in Committee.

[Captain BOURNE in the Chair.]

CLAUSE 16.—(Income Tax for 1935–36.)

3.45 p.m.

Mr. MABANE: I beg to move, in page 14, line 22, to leave out "and sixpence."
The effect of the Amendment would be to reduce the standard rate of Income Tax by 6d. I make no apology for moving the Amendment. It is no good reason for not moving an Amendment that there may be small prospect of it being granted, because surely it is often the case that Members of this House who desire reforms to be carried out achieve the reforms ultimately by persistence one year after the other, and if those of us who desire this reduction cannot get what we wish this year we may very well get the reduction next year. In St. Stephen's Chapel there is a picture which has impressed itself on my mind ever since I have been a Member of the House. That picture depicts the occasion when Sir Thomas More refused the demand of an arrogant Executive, through the mouth of Cardinal Wolsey, for excessive supplies. It is the historic function of this House to resist the demands of the Executive for supplies. It seems that sometimes in recent years that function has been forgotten and that Parliament has tended to concentrate its attention on spending money rather than on the more important object of preventing money being spent. I think that Members of Parliament can have no complaint against excessive spending by Departments if they make no effort to secure that the Departments are kept very tightly in check in their demands for funds.
Wise administration and low taxation go together. Therefore I make no apology for suggesting in this Amendment that the burden upon the people should be reduced by altering the standard rate of Income Tax from 4s. 6d. to 4s. There are those who apparently believe that the Government can spend money better than we can spend it ourselves. I am sure that the Chancellor of the Exchequer could not convince me that he or the Government can spend our money better than
we can ourselves, and I do not think he would advance that argument. But if I understand the argument of the hon. and learned Member for East Bristol (Sir S. Cripps) I think it is generally that he can spend my money better than I can myself. I am not clear whether the reverse is true—that I can spend his money better than he can himself. Therefore I move the Amendment, and I am glad to say that many of my hon. Friends support me in it.
I am aware that the Amendment will raise the old quarrel between direct and indirect taxation. The hon. Member for Leigh (Mr. Tinker) often argues, when this matter comes up for review, that the Government have altered the relationship between direct and indirect taxation. He has advanced the argument that there is some peculiar merit in direct taxation as opposed to indirect taxation, and he often quotes figures to show that the proportion has been altered in a way that is disadvantageous from his point of view. If the hon. Member quotes those figures to-day I ask him to go back further than he usually goes. I ask him to go back to 1913–14. He will then find that the proportion between direct and indirect taxation is more advantageous to his point of view now than it was in 1913–14. Sometimes when this matter has been under review, I have heard some of my friends on the Liberal benches opposite urge that direct taxation has some peculiar merit.

Mr. DAVID MASON: Hear, hear.

Mr. MABANE: I see that the hon. Member for East Edinburgh (Mr. D. Mason) still takes that point of view. I have always looked upon him as a Liberal of the old Gladstonian tradition. Let me quote to him what Mr. Gladstone said in 1861. He should be the last to differ from what Mr. Gladstone said:
I never can think of direct and indirect taxation except as I should think of two atractive sisters, who have been introduced into the gay world of London, each with an ample fortune, both having the same parentage (and the parents of both I believe to be Necessity and Invention); differing only as sisters may differ, as where one is of lighter and another of darker complexion, or where there is some more agreeable variety of manner, the one being more free and open and the other somewhat more shy, retiring and insinuating. I cannot conceive any reason why there should be unfriendly rivalry between the admirers
of these two damsels. I am therefore, as between direct and indirect taxation, perfectly impartial.
I hope that the hon. Member for East Edinburgh will realise than he is not following the Gladstone tradition in urging that there is some peculiar merit about direct taxation.

The DEPUTY-CHAIRMAN: I would remind the hon. Member that we are not now engaged in a general Budget Debate. This is an Amendment to reduce the standard rate of Income Tax by 6d. and I hope the hon. Member will not seek to go into the whole question of direct and indirect taxation on that Amendment.

Mr. MABANE: I was referring to the matter because it had been raised before in these debates. Indeed it has almost invariably been the case in recent years, that debates on this subject have very largely hinged on the question of the merits of direct as against indirect taxation. However I leave that point and I will endeavour to justify my proposal on other grounds. It may be said that there is no margin from which to grant this proposed reduction in tax. At an earlier stage in these debates I and other hon. Members suggested that there was ground for believing that the present Finance Bill under-estimates the revenue which the Chancellor is likely to receive and over-estimates the expenditure which will be incurred. The Chancellor said that apparently I desired him, simply by a stroke of the pen, to write up the receipts likely to be derived from Customs and Excise. But I do not want him to do that. I want him to make his estimates of revenue in the light of his own speeches and the speeches of his colleagues in the Government who say that trade is improving and is likely to continue improvement. I think that is so and that there is a considerable margin there. If we turn to Income Tax itself, we find that last year the Chancellor estimated that he would receive by way of Income Tax £219,000,000. Actually he received £228,000,000. He received something like £9,500,000 more than he anticipated. I think there is every possibility that this year again he will receive a surplus on the Income Tax returns.
I do not think it is possible to justify a reduction of Income Tax however,
solely on the Income Tax returns of last year or on the likelihood of revenue being greater than the Chancellor anticipates. I prefer to justify it on another ground. If Income Tax is reduced, new confidence is at once given to business. Those who are engaged in industry are prepared to go forward with schemes which they might otherwise be reluctant to undertake. Thus employment is provided. The immediate effect of a reduction of Income Tax is to lighten the burden of national expenditure in a great number of ways. The restoration of financial confidence and the encouragement of business men to engage in new enterprises, which result in employment, lead to a diminution of the expenditure which the Chancellor has to anticipate.
I have always argued that there is a close connection between the amount of unemployment and the rate of Income Tax. That view has been hotly disputed by hon. Members on the Labour benches but it is important to bear in mind the figures relating to this matter in recent years. It may be said that the apparent connection which those figures show between the rate of Income Tax and the number of unemployed is a coincidence but the coincidence is very striking. For example, in 1922–1923 Income Tax was reduced to 5s. from 6s. and in that year there was a fall of 500,000 in the number of unemployed. In 1923–24 the Income Tax was reduced to 4s. 6d. and there was a further fall of 200,000 in the unemployed. I am taking the months of April. In 1924–25 there was no reduction and there was an increase of 170,000 in the number of unemployed. In 1925–26 the Income Tax was reduced to 4s. and there was a decrease of 200,000 in the number of the unemployed. In 1930–31, when the party opposite were in power and the Income Tax was increased to 4s. 6d. there was an increase of 800,000 in the number of unemployed. Last year the Chancellor reduced the rate of Income Tax and there has been, as we all know, a fall in the amount of unemployment during the year. Hon. Members opposite may seek to dismiss the connection between these figures as a mere coincidence but it is remarkable that the coincidence has been of such long duration. I strongly urge that a reduction in the standard rate of Income
Tax is one of the best ways of securing an improvement in the economic condition of the country.
If the Chancellor in reply can indicate to those who wish this form of tax to be reduced, that he believes a reduction in the standard rate of Income Tax would have a substantial effect on trade and industry, that I am sure would give us great hope and encouragement. Some of us would like to see the right hon. Gentleman adopt a new theory of budgeting. For example a business man who has to make an appropriation in his annual accounts for advertising, cannot see any definite revenue coming from it. But he knows that if he carries out the advertising with skill he is likely to derive revenue from it in the form of additional profits. I would ask the Chancellor to look at this matter in the same fashion and to reduce Income Tax in order to receive the benefit that will eventually accrue. By adopting that course, I submit he would at the end of the year produce not unbalanced national accounts but, on the contrary, accounts that were balanced in a much better way than our accounts are balanced at present. It would not be a novel step to adopt that view because the right hon. Gentleman adopted it when he altered the rate of taxation on beer and it seems to me that what was good enough in the case of beer ought to be good enough in the case of Income Tax.
There is another point which I have in mind in moving this Amendment. I take this opportunity of submitting to the Chancellor that it would be far better to reduce the standard rate of Income Tax than to reduce the Surtax. There are those who advocate a reduction in the rate of Surtax at the earliest possible moment. That may be desirable, but it is my view and the view of many other hon. Members that a further reduction in the standard rate of Income Tax would do far more for the country and would be far more acceptable. This is not the first time that an Amendment of this kind has been moved. Naturally those who are associated with it would be glad if the Chancellor accepted it, but we feel that that is almost too much, even to compensate. If, however, the right hon. Gentleman in his reply could indicate to us that he appreciates the value of a reduction in the standard rate and the
benefit to the business community involved, I think we should be satisfied that we had not moved this Amendment in vain.

3.59 p.m.

Mr. JOHN WILMOT: I am sure that the Committee is indebted to the hon. Member for Huddersfield (Mr. Mabane) for the revolutionary discovery which he has made, but they will feel aggrieved, as I imagine the whole nation will feel aggrieved, that he has kept it under his hat so long. Here is a quick and easy way of dealing with the unemployment problem completely. You have only to reduce the standard rate of Income Tax to the appropriate level and the unemployment problem disappears. I am surprised that the hon. Member has not let the Chancellor into his secret before now. Here is a great Government which has been struggling with this problem for years, with very little result. Such results as have been achieved, they claim to have been achieved by their tariff policy. And yet all the time a simple reduction in the rate of Income Tax would have done the trick without any harm to anyone.

Mr. MABANE: I am sure the hon. Member does not want to misrepresent me. Naturally I did not suggest for a moment that any reduction in Income Tax would do away with unemployment entirely. I suggested that it would help, and I gather from the hon. Member's argument that he thinks it would not.

Mr. WILMOT: I do not think the hon. Member is entitled to gather that from my remarks. I thought that if a little decrease in the tax would make a little decrease in the unemployment figures, then a large decrease in the tax would make a large decrease in the unemployment figures; but perhaps I was wrong, and perhaps we ought to hear this remarkable doctrine explained at length. The only point I would like to put to the hon. Member in considering this problem in greater detail is this: What, in fact, becomes of the money the Chancellor takes by way of Income Tax out of the pockets of the taxpayers? Does the hon. Member suppose that the Chancellor pockets it, or buries it, or that in some way it mysteriously disappears? Or does he not think the Government are just as much a spender as is the private taxpayer, and that, in fact, every penny
collected by the Government in taxation is spent making work for somebody somewhere? Many of us believe that the sort of work that is made by public departments or public authorities, for instance on housing, or in the relief of the starvation of the unemployed, produces work which gives a more satisfactory social result than the private spending of the individual necessarily does. Surely it is quite beside the point to argue that a reduction in the tax is either here or there in considering its relation to unemployment. The explanation of the hon. Member's figures is surely that in times of prosperity the tax tends to reduce, and the number of unemployed tends to reduce, and that in times of great stringency—these illogical booms and slumps we get under a capitalist system—taxation rises, and unemployment rises with it. They are inter-connected both as to cause and as to effect.
I wish, however, to raise another matter, and I am not quite sure that I am in order in raising it on this Amendment, or whether I should delay the matter until we debate the Question, "That the Clause stand part of the Bill." But might I be permitted to say that before any reduction in the standard rate of tax is considered there seem to me to be two matters of much more public urgency. The first is to make greater allowance to the small Income Tax payer. I do not wish to delay the Committee on this theme for long, but the fact remains that since 1930 the position of the small Income Tax payer, as compared with the big Income Tax payer, has got steadily worse. We all understood last year that the Chancellor of the Exchequer, if I may say so, did realise what an injustice he had done to the small taxpayer, the clerk, the shop assistant, and such people, in reducing the standard rate while leaving the enormous increases that were laid upon these people when the allowances were cut away, and we had hoped that this year the injustices of last year's decision would be set right. They have not been set right. They have been eased, but the small taxpayer, the £3, £4 or £5 a week man, is still paying very much more in tax than he was paying in 1930, while the big taxpayer with a four-figure income is paying much less in tax than in 1930. Therefore, before there is any alteration in the standard rate which primarily affects the big taxpayer, those
allowances should be restored, and, what is more, inasmuch as there has been a very large increase in the amount of taxation upon food and necessaries which are paid in increased proportion by the poor, because the poorer you are the larger the proportion of your income that is spent upon necessaries, and because these poor Income Tax payers are also making a very heavy proportionate contribution to the Exchequer by way of direct taxation, they should certainly reap the benefit of increased and not decreased allowances.
The second thing which must be attended to before any reduction in standard rate is considered is that some urgent and stringent measures should be taken to deal with the wholesale evasion of the payment of Income Tax by the wealthier classes of Income Tax payers. It is this matter which I desire at the moment to bring to the attention of the Chancellor. It is not desirable, in the public interest, that one should go in very great detail into the methods by which Income Tax and Surtax payments are evaded, but there are methods, and they are perfectly legal methods, as the taxpayer is entitled to find any legal method by which he can evade the tax. The fact is that the very rich, who can afford to employ expert advisers, legal and accountancy advisers, maintain a system by which they systematically avoid the payment of their due tax. It must be remembered that every £100 of tax which these people evade adds to the burden of the smaller Income Tax payer, and I think it probably would turn out true to say that if the hon. Member could join with me in persuading the Chancellor to take steps to stop this evasion, then the inflow of tax would be sufficient to permit of a reduction in the rate.

The DEPUTY-CHAIRMAN: I think the hon. Member is now getting on to a matter which should be raised on the question of the Clause standing part.

Mr. WILMOT: I was hoping that it would be in order to show that one means of achieving the object which the hon. Member for Huddersfield has in mind is to see to it that those who should pay the tax do in fact pay it, and I am rather disappointed that no step has been taken this year to tighten up the regulations,
and make one or two obvious improvements in the law which would have this result. I will not detain the Committee more than two or three minutes by indicating where these improvements should be directed.

The DEPUTY-CHAIRMAN: That is a matter which the hon. Member should have raised on the Second Reading. It is not connected with any matter now in the Bill.

Mr. WILMOT: I am anxious to keep within your ruling, Captain Bourne, but, inasmuch as we are now discussing a Clause which has to do with the collection and amount of the Income Tax, and the amount of the Income Tax is necessarily related to the yield of the tax, because the rate is fixed by reference to the yield, I thought I might be in order in discussing methods by which the yield of the tax could be brought up to its full amount in order to make it possible to consider a reduction of the rate.

The DEPUTY-CHAIRMAN: I am afraid not. I think the hon. Member does not appreciate that the machinery Clauses, as they are generally called, are put quite separate from the Clauses which fix the standard rate for the year. I think that is a matter which really ought to be raised in debate on the Budget or Second Reading. It is really a Second Reading point.

Sir STAFFORD CRIPPS: Is it not relevant to this matter to discuss the problem whether it is possible to provide some alternative method of getting the revenue lost by the reduction of the tax by sixpence? I submit that it is one of the vital matters for the Committee to consider, in discussing whether it should or should not reduce the tax by sixpence, what the result of that reduction would be, and whether there are other means by which the revenue that would be lost by the reduction could be made good.

The DEPUTY-CHAIRMAN: I think the hon. and learned Gentleman is overlooking the fact that it would not be open at this stage either for the Committee or the Chancellor of the Exchequer to propose these machinery Clauses without a Financial Resolution.

Sir S. CRIPPS: In so far as it concerns the administration of the collection of
Income Tax, would not that be open to discussion at this stage?

The DEPUTY-CHAIRMAN: I think the hon. Member was going very far beyond the question as to whether the law is being administered. He was suggesting that the law was not satisfactory, which is going a very long way from this Clause.

Mr. WILMOT: I very much appreciate now what I did not before, and am very grateful for your guidance. What I was going to say in relation to the necessity of improvement in the law, I realise would be out of order at this stage. But part of what I was going to say had to do with the administration of the present law. There are under this heading two main methods in which the administration of the present law, it seems to me, could be considerably tightened up. There is, first of all, the question of capital profits.

The DEPUTY-CHAIRMAN: Of course, this would really come more appropriately on the question of the Clause standing part. If it be the wish of the Committee to take the discussion now, I have no objection, provided it is understood that it is not to be repeated on the question of the Clause standing part.

Mr. WILMOT: I quite understand it would be most undesirable and unnecessary to discuss this question again on the Clause standing part, but I was not quite sure what was the appropriate time to do it. As I was saying, one very fruitful method of evasion is the evasion of taxation of capital profits. Normally, profits which arise from an improvement in the value of the taxpayer's capital are not liable to Income Tax, unless, of course, the taxpayer carries on a business which is one which reaps its main income from periodical improvements in its capital. There is a City operation known as "stagging," for instance, which employs the genius and the energy of a very large number of professional speculators. These gentlemen apply for new issues, and as soon as they get their allotment letters they sell them as they hope at a premium. Those who are most successful in these operations are most in a position to know at the time of their application whether the issue will go to a premium or not, inasmuch as they have in their offices the orders of other people which, if sufficient, will allow the issue to go to a premium. [An HON. MEMBER:
"What are the methods?"] I must be excused from giving any indication as to the methods of making these profits.

Major PROCTER: Is the hon. Member in favour of giving a rebatement of Income Tax where capital is lost?

Mr. WILMOT: Perhaps the hon. and gallant Gentleman will allow me to finish my sentence. It is a fact that there is a large number of people who draw a part of a very large income from capital profits, and these profits are taxable if the earning of such profits is the main business of the taxpayer. Therefore, the hon. and gallant Member can answer his own question, or get the Chancellor to answer it, very much better than I can answer it. The net profit on the year for professional operators is taxable as income.

Major PROCTER: But a speculator's trade losses are taken into account.

Mr. WILMOT: I said the net profit.

Major PROCTER: In the case of the ordinary person who makes a capital investment, losses should be taken into consideration.

Mr. WILMOT: The hon. and gallant Member has been good enough to anticipate my speech several paragraphs ahead. The professional speculator pays tax on his net income—

Major PROCTER: Then there is no evasion.

Mr. WILMOT: No evasion up to that point, but if the hon. and gallant Member will have the kindness to wait a moment, he will see when the evasion comes in. A large amount of evasion goes on by these operations being carried out in the names of nominees, who are not professional operators and are therefore not liable to be taxed on capital profits, nominees who are not liable to Super-tax and who therefore, even if they are taxed, are taxed at a lower rate than the real, beneficial operator.

The DEPUTY-CHAIRMAN: It now appears that the hon. Member is advocating an alteration in the law.

Mr. WILMOT: With great respect, I suggest that no alteration in the law is required to effect the reforms which I
am now suggesting. I believe I am right in saying that the Chancellor of the Exchequer is armed with the fullest legal powers to collect the tax from the places where I am suggesting it should be collected, and that all that is wanted is a slightly different method of assessing the various forms of income for taxation. I will therefore ask the Chancellor of the Exchequer to bear in mind the fact that it is generally known in the City that a very large number of professional advisers are perpetually engaged in advising people how to escape Income Tax on capital profits.

Sir ARTHUR MICHAEL SAMUEL: The hon. Member has rather left the point. He was talking about profits made by non-professional people speculating in a system called, I think, stagging. I do not quite understand it, but is he quite right not to remember that casual profits are very distinctly defined, not only by the Revenue, but by a recent judgment in the High Court? Consequently the point that he is making is already provided for in the practice of the Revenue.

Mr. WILMOT: I am very much obliged to the hon. Baronet, and I am aware of that decision with regard to capital profits.

Sir A. M. SAMUEL: Casual profits.

Mr. WILMOT: Casual capital profits, but I am directing the attention of the Chancellor of the Exchequer, first, to the practice of professional operators carrying out their operations in the names of nominees and thus escaping a tax which we all agree ought to be paid. The second point to which I wish to draw the right hon. Gentleman's attention is the method of evading the tax by revocable trust. This is a practice which is engaged in very widely by Super-tax payers. There are professional people here again who have drawn up standard forms. I have one on my desk, and—

The DEPUTY-CHAIRMAN: Is the hon. Member suggesting that the Chancellor of the Exchequer can deal with this matter under the existing law?

Mr. WILMOT: I am, because in the Finance Act of 1922 a Section was included—

Sir A. M. SAMUEL: Section 21.

Mr. WILMOT: —to deal with this very matter, and it is the somewhat lax administration of the law under that Section, I suggest, which gives rise to the evasion which I am now mentioning. This particular class of evasion is a method of settling upon dependants, children and others, an annuity. The Super-tax payer deducts his Income Tax, and the annuitant, being a person taxable at a lower rate than the one who donated the annuity, is able to recover a large portion of that tax; and since this annuity is devised under a form which enables it to remain under the control of the Super-tax payer, it has the effect of relieving the Super-tax payer of a very large part of his tax.

Mr. MABANE: Is the hon. Member correct? It is not devised so that it is under the control of the taxpayer. He must say he has no control over it.

Sir A. M. SAMUEL: The very essence of the Section is that the money should be so placed that it is irrevocable, but the hon. Gentleman said that it was revocable.

Mr. WILMOT: There are two forms of it, and I hesitate to go into too great detail, lest this evil practice should grow by advertisement, but since hon. Members press me, I would point out that there are two forms of it. There is the minimum of six years for the dependent relatives, and that is revocable at the end of six years; and there is the life annuity for the children, which is irrevocable by the donor, but which can be altered and reduced to a purely nominal sum if only a provision is inserted that in order to alter it the consent of some third party is required. I have on my desk the standard form sent out by a firm of professional advisers, instructing the Super-tax payers exactly how they can get rid of the great bulk of their Super-tax, and for a small or a large fee, according to the size of the income, these gentlemen will exercise their professional skill advising you how to avoid your tax and, what is more, how to avoid it without fear of getting into a criminal prosecution. I am sure it is in the interests of all of us that these practices should be stopped, because the result of them in the aggregate must be a tremendous loss to the Exchequer.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain): The hon. Member has repeatedly said that he is not suggesting any alteration in the present law, yet he has just explained that in the circulars with which he is so familiar it is represented to the people to whom the circulars are addressed that they can carry out this evasion without any fear of prosecution. How does he reconcile those two statements?

Mr. WILMOT: The Chancellor of the Exchequer will appreciate that I am not a lawyer. It is difficult for me to say exactly how these things should be legally effected. That is not my job, and it seems to me that the Chancellor of the Exchequer should be otherwise interested in this subject than in finding a flaw in the precise manner in which the case is presented. The fact remains that there is wholesale evasion of tax, and that there is known to be wholesale evasion of tax. This evasion is carried out only by the big tax-papers, and therefore a comparatively few cases, a few thousand or hundred thousand cases, can mean an enormous loss to the Revenue. It is not done at all by small people. No small man has a chance of avoiding the payment of his Income Tax. His income is returned by his employer. The inspector of taxes knows exactly what his income is, and it is impossible for any salaried person, for the great bulk of small Income Tax payers, to avoid a penny of taxation. The net result of the evasion of tax by the rich is to load a still heavier burden on the poorer Income Tax payers. For that reason, and with apologies for any transgression of the Rules of Order that I may have made, I would press upon the Chancellor of the Exchequer the urgent necessity of taking active steps to stop tax evasion by the Super-tax class.

4.23 p.m.

Sir A. M. SAMUEL: The hon. Member has made frequent use of the word "evasion." If he means that something unworthy is being done, which I suppose he does, and therefore that something illegal is being done—

Mr. WILMOT: In my view an act may be socially unworthy, though not actually illegal.

Sir A. M. SAMUEL: The hon. Member used the word "evasion," which was a
condemnation of action about which I know nothing but of which he accused his fellows. Will he bear in mind that a taxpayer has to make a declaration, and that if he declares anything that is not true, the Revenue authorities will take good steps to see that he is punished. If he does anything unworthy—

Mr. WILMOT: Not unworthy, only illegal.

Sir A. M. SAMUEL: He cannot do anything illegal, because if he did he would be punished, if found out, and it is easy to find it out. The hon. Member must bear in mind a very noble and a very true obiter dictum which fell from the lips of Lord Sumner in a great judgment in the House of Lords some years ago, when he said that there is nothing unworthy, nothing wrong and immoral, for a man to put himself outside the net of taxation, provided he does nothing illegal. These men whom the hon. Member has in mind have done nothing unworthy, unjust, or illegal, and he has no right to make that accusation when the highest Judges in the land have said that it is not immoral.

4.26 p.m.

Mr. D. MASON: I was very much impressed by what was said by the hon. Member for Huddersfield (Mr. Mabane), who opened this Debate. Surely he did not mean to convey to the Committee that on the present Budget the Chancellor of the Exchequer could reduce the Income Tax by 6d. in the £? He is aware that that would mean a loss of some £25,000,000 to the revenue, and that the right hon. Gentleman would not be able to balance his Budget. When the hon. Member comes to think it out, while I have every sympathy with his desire to reduce the tax, I feel sure he will see that it could not be carried out as he suggests.

Mr. MABANE: Two years ago I moved a similar Amendment, and I was met with the same reply, that if the concession were granted, the national accounts would be unbalanced. Had the concession been granted, in fact the national accounts would not have been unbalanced, but would still have shown a substantial surplus at the end of the year.

Mr. MASON: That is purely hypothetical, and I do not think we can
pursue the matter any further. I was also much interested in what was said by the hon. Member for East Fulham (Mr. Wilmot) with regard to the hardship of continuing a high rate of Income Tax. He seemed to argue that there was a benefit in spending money, that it meant an increase of employment. If that argument were carried to a logical conclusion, it would mean that the more we spent, the more prosperous we should become.

Mr. KIRKWOOD: Hear, hear!

Mr. MASON: The hon. Member says "Hear, hear," but where does he suggest these unlimited sums would come from?

Mr. KIRKWOOD: All good things come from the earth. There is enough and to spare for everyone. There is an unlimited supply of all the necessaries of life to-day in the earth, and man's ingenuity has tapped the sources of nature and made nature do man's work, so that there need be no shortage of anything. There need be no limit put on the spending power of the people. It is only those who have control of all the means of life who curtail them and keep them back from the people. That is the trouble to-day.

Mr. MASON: I thank my hon. Friend for his reply. I am equally anxious to develop the earth, but in order to do that we must have regard to our taxation. If we can, by wise administration and due economy, reduce the burdens of industry, we shall get more out of the earth and our industries will be profitable. The taxation of this country has gone up from over £3 per head before the War to over £15 to-day. That is a colossal increase.

The DEPUTY-CHAIRMAN: I think that the hon. Member had better get back to the Amendment.

Mr. MASON: We are discussing the question of bringing down the Income Tax, and I think you will agree, Captain Bourne, that that depends on our expenditure, and that if we can reduce our expenditure it will be possible to accept the Amendment. That is my argument and my answer to the hon. Member for Dumbarton Burghs (Mr. Kirkwood).

Mr. KIRKWOOD: Will the hon. Member tell the Committee where this £15 comes from?

The DEPUTY-CHAIRMAN: Not on this occasion.

Mr. KIRKWOOD: It would be instructive not only to the Committee, but to the country. The hon. Member for East Edinburgh (Mr. Mason) is making out a case that because the country was taxed £3 per head at a given time and the tax is now £15, an immense burden is being placed on the individual who pays the tax.

The DEPUTY-CHAIRMAN: That is exactly the point I stopped the Member for East Edinburgh developing. This is not the occasion on which to do it.

Mr. KIRKWOOD: With your permission, Captain Bourne—

The DEPUTY-CHAIRMAN: The hon. Member for East Edinburgh (Mr. Mason) is in possession of the Committee.

Mr. KIRKWOOD: The man who has to pay £15 must have the money with which to pay it.

Mr. MASON: If I may return to the argument of my hon. Friend who moved this Amendment, I would say that if we could bring about a state of affairs which would enable us to reduce the Income Tax, I would welcome it and would be prepared to go into the Lobby with him in order to bring about that happy result. I suggest to the hon. Member and to the hon. Member for East Fulham, however, that neither of the policies which they advocated would bring about the desired result of increasing employment. If we could reduce our burdens by wise expenditure and wise economy, it would increase our ability to reduce the Income Tax, but the Chancellor cannot seriously be asked to do it when it would mean a loss in balancing the accounts of the year.

4.35 p.m.

Mr. TINKER: Each year we get the protagonists for a reduction in direct taxation endeavouring to get a reduction in Income Tax. We expect hon. Members opposite to raise this point, not that they expect any change in this Budget, but it is propaganda for the purpose of the next Budget. I remember that two years
ago the same arguments were put forward, but nothing was done, except that the Chancellor promised to reconsider it, with the result that in the following year 6d. was taken off. Hon. Members now hope that a similar result will follow next year. It is interesting to see in a paper called the "Income Tax Payer" how they carry on this propaganda work. This paper states:
Despite the concessions obtained from the Chancellor of the Exchequer in his recent Budget, the need remains for all Income Tax payers to continue to agitate for further and more extensive reductions of the burden. This society can justly claim that it suggested and pressed for all the changes which were made.
But still they mean to go on pressing for further reductions. One could agree with their point of view if they did not get their reductions at the expense of somebody less well off. No one desires Income Tax payers to have to bear an excessive burden if they can be relieved without the burden being imposed on somebody else less able to bear it. I was pleased to find that the hon. Member who moved the Amendment was not out to protect the Super-tax payer. We are rather hoping that the Chancellor will see his way to impose a greater burden on them. Those who urge a reduction of Income Tax argue that it will cause more employment. Each year the argument is used that there is not money enough to finance new works owing to the burden of Income Tax, and that employers and big financiers are, stifled because they cannot use the money which has to go in Income Tax. That is a curious argument, because within the last few days loans which have been issued by local corporations have been over subscribed. The Manchester Corporation asked for a loan of £4,000,000 at 3 per cent., and it was subscribed 25 times over. That goes to show that there is money on every hand for the purpose of financing every scheme that requires it, and that there is no lack of money at all.

Mr. MASON: Sound schemes.

Mr. TINKER: At any rate, the money is there, and those who have it must be largely Income Tax payers. The Cardiff loan was also over subscribed. The argument, therefore, that there is a shortage of money can have no weight at all. The right hon. and gallant Member
for Ripon (Major Hills) argued on another line in a previous debate. I looked up his speech because he is always interesting on these matters. He argued that it would cause a greater consumption of goods if Income Tax were reduced, and he said that in the previous 12 months 270,000,000 more pints of beer and 700,000,000 more cups of tea had been drunk.

Mr. G. GRIFFITHS: The Chancellor of the Exchequer said that.

Mr. TINKER: The right hon. and gallant Member also said it in his speech on the 1st May. He was arguing that more would be consumed if there were remissions in tax, and that less would be required from Income Tax payers because the revenue received from beer and tea would meet the deficiency.

Major HILLS: I have not my speech by me, but my recollection is pretty clear that I argued that changes up or down in the Income Tax were accompanied by changes in the unemployment level up or down. I said that I did not think that was the only cause, because that would be an overstatement, but I said that the curve of unemployment did follow the Income Tax rate.

Mr. TINKER: Following that line of argument, the right hon. and gallant Member contended that unemployment would be reduced by a remission of Income Tax and that, therefore, greater consuming power would be given to those in employment. Does the right hon. and gallant Gentleman think that this is the way to proceed? We on these benches say that you give greater consuming power to the poorer classes by remitting indirect taxation, that the money they pay by way of indirect taxation would, if they were able to keep it by them, give them greater spending power. We say that if the Income Tax payers had to pay 4s. instead of 4s. 6d. in the pound, it would not increase their consuming power because we do not believe that any Income Tax payers go short of anything. Therefore, we say that at a time like this they are not being harshly dealt with by being asked to pay 4s. 6d. in the pound.

Major HILLS: That is where we differ.

Mr. TINKER: We are told from time to time that by keeping up this excessive burden we shall kill the goose that
lays the golden egg. This year the Chancellor will get £237,000,000 by way of Income Tax; last year he got £228,000,000. Clearly, the source is not being dried up by keeping the tax at 4s. 6d. In Super-tax we shall get an increase of £335,000 over last year, which shows again that we have not got to the point of killing the source of the money. Then, with regard to Death Duties—

The DEPUTY-CHAIRMAN: I think that we had better keep to the Income Tax.

Mr. TINKER: I agree, but one naturally follows the other because the Income Tax payer is the man who generally accumulates a fortune. [HON. MEMBERS: "Oh!"] The man who does not pay Income Tax does not accumulate a fortune and, therefore, the converse must be true.

Captain DOWER: An hon. Member on that side has just been explaining that the man who evades Income Tax creates the fortune.

Mr. TINKER: I am not speaking of the man who evades tax. I am saying that if fortunes are left it must be by the people who pay Income Tax. The man who does not pay Income Tax, the poorer man, will never accumulate money. If he had much money he would have to pay Income Tax. I was trying to show to the Deputy Chairman that that source has not dried up. I put it to the Committee that we have no right to reduce the Income Tax until the time has come when we can say that our poor people are in a much better position than they are. If we were to agree to this Amendment it would mean taking from the revenue one-ninth of the yield of Income Tax, £26,250,000. Does the hon. Member dispute that?

Mr. MABANE: Yes. You quoted £237,000,000 as the yield, but it is £232,000,000.

Mr. TINKER: I cannot allow that to go by. I have the figures here. The estimate for 1935–6, on the basis of existing taxation, is £237,000,000.

Mr. MABANE: On the basis of existing taxation.

Mr. TINKER: That is what we are talking about.

Mr. MABANE: No, because there is £5,000,000 reduction.

Mr. TINKER: I am taking the figures given by the Chancellor of the Exchequer.

Mr. MABANE: Look at the end. Look at the Estimates for 1935–36, and you will find the figure is £232,000,000.

Mr. TINKER: It would mean a reduction of one-ninth of that figure, about £26,250,000. Even if it were a few pounds less the principle is the same. Where would the hon. Member get the money from to balance the Budget? Would he say that some social services should be cut down? If he would say that some of the defence services ought to be cut down we might get agreement with him, but if he suggested cutting down the social services no one would agree with him. If he does not agree about either, he has no right to bring forward this Amendment, because if carried it would upset the whole of the Budget. In the courts, when a man appeals against a sentence or a fine the judge, if he thinks the man has been treated fairly, and has no grounds for appeal, can increase the penalty. When Income Tax payers come to this House asking for a remission of the rate of tax, if we are satisfied that they have made out no case we ought to take it upon ourselves to increase the tax. The judgment of this Committee to-day ought to be, "You have no grounds to support your case, and so we now increase the tax by 6d., just to put you in your place and warn you against such appeals."

Captain DOWER: Is the hon. Member in favour, and is his party in favour, of an increase in the rate of direct taxation?

Mr. TINKER: I will not speak for my party, because they will speak for themselves, but if the question were left to me I would say, "Yes, increase it, and take the burdens off the poorer people." If I were the judge and had to give my decision in this case I would say, "You have failed in your appeal, and therefore my decision is that there shall be 6d. more on the Income Tax." That would teach people to be more careful before bringing forward these proposals. There is another point which has been brought to my attention from time to time. The lower Income Tax payers meet their liabilities honourably and fairly, but I
have seen cases reported in the papers in which many of the higher Income Tax payers have failed to pay year after year, and when the time has come to foreclose it has been found that thousands of pounds were owing to the State. I ask the Chancellor of the Exchequer whether there are no means by which he could prevent this evasion year after year by large taxpayers. The authorities ought to be a bit more strict with the larger Income Tax payers and see that they pay from year to year.

4.50 p.m.

Mr. CHAMBERLAIN: The Debate to which we have listened for the past hour has followed the course of many previous discussions on the same subject. The hon. Member for Huddersfield (Mr. Mabane) trailed his coat in front of the hon. Member for Leigh (Mr. Tinker), and the hon. Member for Leigh trailed his coat in front of my right hon. and gallant Friend the Member for Ripon (Major Hills), and each one stamped with joy on the coat tails of the other; but not a single jot of difference is made in the opinions of a single one of them. This Debate has been purely academic. No doubt it is a subject for a debating society; but I think my hon. Friend the Member for Huddersfield himself recognises that in the circumstances of to-day there is not the slightest chance of a reduction of the Income Tax by 6d. in the £. Indeed, he said that he had little hope of getting a favourable reply; but he did trust that I might be able to express some opinion as to the connection between a reduction in Income Tax and a reduction in unemployment, and he thought that if I would put my name to some declaration of that kind his time would not have been spent in vain. I cannot allow him to lay that flattering unction to his soul, because I am not disposed to commit myself to any such general and empirical declaration as that which he would desire me to make. The effect of a reduction in the rate of Income Tax might be quite different to-day from what it would have been last year or the year before. The whole thing must depend upon other conditions, which vary from time to time. If I am to make any sort of general declaration on the subject I would say that the enterprise of business and commercial people will depend upon the amount of confidence they feel
in what is going to happen in the future. If that confidence is strengthened by a decrease in the rate of Income Tax it is likely to increase their enterprise, but if they see that a reduction in the rate of Income Tax would have the effect of seriously unbalancing the Budget and introducing a period of unsound finance, that is not likely to increase their confidence but to have exactly the opposite result, and I should anticipate that in conditions of that kind, so far from assisting the country, it would be inclined to increase unemployment.
It is true that the hon. Member endeavours to avoid the difficulty that his proposal would cost the country £25,000,000 by suggesting that it could very easily be overcome by increasing the estimate of revenue and decreasing the estimate of expenditure. Again in a debating society you could, of course, easily do that, but if you have to accept the responsibility for your actions you think twice before you indulge in easy alterations of carefully considered estimates. When my hon. Friend says that last year I under-estimated the yield of Income Tax by £9,000,000 odd he has forgotten, or he has omitted to state, what I did say on a previous occasion, that the bulk of that excess over my estimate arose not from an increased assessment to Income Tax but from an increased rate of collection. Therefore, the extra millions which I obtained last year owing to that rate of collection, so far from being repeated this year, will mean that there is less to come in this year, because that sum might otherwise have accrued to me as arrears from last year in the course of the present financial year.
Another point has been raised by two hon. Members opposite in connection with the collection of Income Tax as it is. The hon. Member for East Fulham (Mr. Wilmot) soon found himself in a difficulty, because his case was that there was a necessity for an alteration of the law in order that certain evasions which he alleged were going on might be made subject to the penalties of the law. In spite of his assurance, I do not think he succeeded in convincing the Committee that he had any ground whatsoever for the suggestion, which I think was an afterthought on his part, that there was any laxity in the practice of
the Inland Revenue Board in putting into operation the law as it stands. There is all the difference in the world between the man who, in contravention of the law, does something illegal, and the man who does something which is perfectly legal although it may not have been intended by the framers of the law that he should be allowed to do it. Of course, when you get taxation up to the level at which it stands in this country you do necessarily very greatly strengthen the inducement to see whether there is some device by which you can legally evade the full amount of tax which otherwise would fall upon you, and it is only human nature that in those circumstances lawyers, and perhaps Members of Parliament sometimes, whether they are lawyers or not, should turn their wits to seeing how they can get the better of the law. From time to time, when these ingenious devices have reached a certain pitch of efficiency, it is necessary to amend the law.
It is not in order for me, however, to discuss any Amendment of the law on this occasion. I will only say that evasions are most carefully watched by the Treasury the whole time, that we have constantly under consideration methods of avoiding the intention of the law, and that we on our side exercise a good deal of ingenuity in devising new methods of what I might call "stopping the bolt hole." If I have not been able to complete measures for stopping evasions which may be going on at the present time I hope the Committee do not think that the matter is escaping my attention, or that those who employ those methods can hope indefinitely to be able to pursue them. I give that information, and I assure the Committee that the interests of the Inland Revenue Board in the efficient collection of duties are so great that they may rely upon it that no stone is left unturned to see that evasion of an illegal character is not carried out or that, if it is practised, those who lend themselves to it are properly punished.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

4.59 p.m.

Mr. WEST: I have listened this afternoon to several Members who seem to doubt that the State, having collected
money from individuals, can spend that money as well as those individuals themselves. The hon. Member for Huddersfield (Mr. Mabane) is quite certain that he can spend his money much better than any Government Department could. At the same time, there are those of his own political persuasion who have stated very clearly that that is not the fact. The Colwyn Committee, when discussing this very problem, said:
For social purposes collective expenditure is clearly more economic than expenditure left to the individual,
the individual Member for Huddersfield not excepted. The hon. Member made an interesting point, though not a new one, about the effect of income taxation upon unemployment. He produced figures showing how when Income Tax was high unemployment was high, and when Income Tax was low unemployment was low. I noticed with great interest that his figures coincided with figures quoted by the right hon. and gallant Member for Ripon (Major Hills) on a previous occasion, but, in spite of that authority behind him, I notice that the right hon. and gallant Gentleman has cautiously removed his name from the Amendment in the last few days. Probably he thought about it again and came to a different conclusion.

Major HILLS: I made the case so fully on the Motion that I did not think I was entitled to trouble the Committee again.

Mr. WEST: The right hon. and gallant Gentleman is very modest, but I think, if he made the statement again that he made a few weeks ago, it would have yet more authority. He stated that in January, 1923, when the Income Tax was 5s., there were 1,500,000 unemployed and in the following year, when the tax was reduced to 4s. 6d., the unemployed went down to 1,374,000. In January, 1931, when the tax stood at 4s. 6d., unemployment had exactly doubled as compared with the time when the tax first stood at 4s. In January, 1935, the tax was 4s. 6d. and the numbers went down to 2,300,000. The whole argument was that, as you increase Income Tax, so unemployment goes up, and, as you decrease it, unemployment goes down. It is a case of post hoc, ergo propter hoc. One might as well say that in 1920, when the Salvation Army had five bands, unemployment was a
million and in 1930, when the Salvation Army had only two bands, unemployment went down to 500,000; therefore the Salvation Army is the best cure for unemployment. It is a fallacy because the right hon. Gentelman forgot to mention that in 1900 the unemployment percentage was 2.5 whereas in 1913, though we had increased taxation and Income Tax, unemployment went down to 2.1 per cent. In 1920, when we had the highest Income Tax in a peace year—6s. in the pound—unemployment was at the lowest rate in the century. I would not argue that we should double the Income Tax because I know that there are many factors in unemployment which are very much more important than taxation. I have heard tariffs claimed as the cause of reduction in unemployment, and I have heard cheap money claimed as the clause. These gentlemen come forward and say it is because Income Tax has been reduced. I can quote fairly high authority, the Colwyn Committee, which said with regard to this question:
We conclude with regard to enterprise that the effects of high income taxation have been almost negligible in the field of employment. Relatively income taxation has not been a factor of any high importance.
I think that is evidence even more weighty than the points put forward by the right hon. Gentleman and his supporters to-day. In 1880, when the Income Tax was practically nil, we had only 6,000,000 adults employed. In 1920, when it was 6s. in the pound, we had over 12,000,000 adults employed. Multiply the Income Tax by 12 and you have double the number of people in employment. That is a fallacious argument, but it is the argument put forward by the colleagues of the right hon. Gentleman on the Front Bench, and I think he might speak to them later on in the Library.
The whole point that seems to me to run through the argument to-day is that taxation is increasing and has increased and ought to be decreased. That is not true. I find, on looking through the report of the Commission for Inland Revenue for this year, that a man with £10,000 a year unearned income in 1920 paid Income and Surtax of £4,100. In 1933 the same man paid £3,960, or £150 less. If you take into account the great fall in prices, the same person has a purchasing power 50 per cent. greater than he had 14 years ago. I should think
there are very few poor people whose real purchasing power has increased by 50 per cent. since 1920 and, if that be true, it goes to show that the well-to-do have benefited very much more than the average individual in the last 13 or 14 years. Table 40 of the same report shows that the actual income of Income Tax payers in 1925 was £2,400,000 and in 1935 it was £2,550,000. The actual income of Income Tax payers has gone up in that period of nine years by £150,000 per annum and taxation has gone down by £23,000,000. The average effective tax in 1924 was 27d. per pound. In 1933 it was 23d. per pound. From that point of view Income Tax payers are very much better off now than they were nine years ago even without taking into account the fall in the cost of living, which affects them as well as ordinary people. The yield of Customs and Excise has increased by £50,000,000 in the last seven years. Since 1919 it has increased by over £200,000,000. If it be true that of that vast sum two-thirds is paid by working-class people, the taxation of the poor has increased in that period by over £140,000,000. In other words, according to these figures the taxation of the well-to-do has decreased and the taxation of ordinary people has greatly increased in the same period.
As a matter of fact, in spite of the statement of the hon. Member for Huddersfield (Mr. Mabane), the vast majority of Income Tax payers do not pay 4s. 6d. in the pound now. I am not discussing tax evasion. Even the great bulk of them who are honest do not pay 4s. 6d. in the pound. I have figures here from Table 64 which show that the effective charge on a married man with two children, if he has £1,000 a year, is 2s. in the pound. If he has £1,500 a year, he only pays an effective rate of 2s. 6d. On an income of £2,000 a year the effective rate is 3s. in the pound. So, if the hon. Member wants a reduction from 4s. 6d. to 4s., he has it if he has £2,000 a year, as he ought to have.

Sir IAN MACPHERSON: Where did the hon. Member get these figures?

Mr. WEST: I refer the right hon. Baronet to Cmd. 4739, pages 76 and 81. Less than 1 per cent. of the people who are above the Income Tax limit level pay an effective rate of more than 3s. in the
pound. As I know my hon. Friend is one of that 1 per cent., I am not commiserating with him. I wish I could join him in his fortunate company. On the other hand, I discover that a person with an income of £100 pays 11.9 per cent. in taxation, while a person with £1,000 a year pays just 11 per cent. In other words, the poorer you are, up to a level of over £1,000 a year, the less is your percentage of taxation. The "Economist," which does not entirely support our party, in its budget supplement a month or six weeks ago, summed up the point fairly. It said:
There is good reason for saying that the incidence of taxation is less fairly distributed now than at any time since the War. It should be the object of wise policy to remove some of the burdens of taxation from the shoulders of the poor.
Not from the shoulders of the Income Tax payers but from the shoulders of the poor, though perhaps it thinks that those with £2,000 a year are poor. Finally, it says:
Judged by the standards of equity, the poor to-day are severely over-taxed.
My final point is this. I cannot understand hon. Members opposite arguing as if their Government did not wisely use the money that they extract from the taxpayers. Looking at the posters on the hoardings, I should think it was a Government of all the talents which spends every pound in a wonderful way. I am sure that the right hon. and gallant Member for Ripon will agree that £1,000 spent by a Government Department, say the Ministry of Pensions, in giving 10s. a week to 2,000 old people, would be as effective in providing employment as £1,000 spent from his own pocket in his own individual way. National spending is at least as good for employment—in my opinion it is better—than spending by individuals, however wisely they may spend. The poorer people who get the benefit of social services spend the money in clothes, boots, furniture and so on, and the expenditure provides more employment than the same amount of money spent by a wealthy Income Tax or Super-tax payer. Perhaps that is the reason why the right hon. and gallant Gentleman, thinking things out in his own intelligent way, decided to withdraw his name from the later Amendment, and to support Income Tax at 4s. 6d. in the pound.

5.16 p.m.

Major HILLS: One point only. The figures I gave on the lath May were not selected figures. I covered the last 15 years and showed that the level of employment up or down followed the level of the standard rate of Income Tax up or down, and the figures have not been challenged and cannot be challenged. The hon. Member has taken selected years and selected figures. If I heard him aright, he went back to 1880 and compared the figures of employment then with the employment figures of 1921, a gap of 41 years. That showed a doubling of employment as there were 6,000,000 people in employment in 1880 and 12,000,000 in 1921 in spite of the largely increased Income Tax. How could he compare those figures. In 1880 there were no proper statistics of unemployment, and there has since been an immense increase in population. There was practically no Income Tax. My argument was that when there is a high Income Tax as we have had since the War, that is one of the factors which has affected the employment level. I did not say that it was the only factor, but it is very hard for anyone who has looked at the figures not to come to the conclusion that one cause of unemployment from which we unfortunately suffer is the standard rate of Income Tax. I should have liked to follow the hon. Gentleman in some of his divagations into other figures, but I shall not do so.

5.19 p.m.

Mr. EMMOTT: It may be true, as the right hon. Gentleman said a few moments ago, that this Debate is academic in relation to the circumstances of the moment, but in no other sense is it academic, for arguments have been introduced into it which are academic neither in their nature nor in their effect. Socialists are apt to practise what they preach, or to attempt to practise what they preach, and much of the argument to which we have listened, when Socialists assume power and attempt to convert argument into practical policy, has results which are always dangerous and sometimes fatal to the societies in which they are realised. The hon. Member for East Fulham (Mr. Wilmot) stated as a general proposition that the Government is as much a spender of the money which it collects by way of taxation as private individuals,
and his position was that more satisfactory social results follow from the expenditure of money by Government—

Mr. WEST: In many cases—

Mr. EMMOTT: —than follow from the expenditure of money by individuals. That is the fundamental assumption which underlies not only his argument but the argument of the hon. Member for North Hammersmith (Mr. West), and upon which I wish to offer a few observations. I believe that no economic doctrine can possibly be more fallacious or more dangerous than this. The question ought, of course, to be considered not only from the end of expenditure but from the other end, the end of collection, but to do that would lead me into a wider field than I desire to enter this afternoon. I desire to say only a word upon that aspect of the subject which is concerned with the expenditure of money obtained by Government from its taxpayers.
I do not agree, comparing generally one kind of expenditure with the other, that Government as a spender of money is to be preferred to individuals. To consider the matter only from a rather technical point of view: delay and waste are always involved in the expenditure of money by Government, whether central or local, and for that reason alone I strongly dispute the truth of the proposition that, upon, a general comparison between the two kinds of expenditure, Government as a spender of money is to be preferred to individuals. But I want to say a word upon a wider consideration. The hon. Member for North Hammersmith seemed to argue that relatively poor persons spend their money in a way which is on the whole more advantageous than the way in which direct taxpayers, if taxation did not stand at a certain level, would then spend it; and he referred to expenditure upon boots and shoes and such objects which are habitually purchased for common use by these persons. But is it not true that relatively rich men and women also buy boots and shoes? Do they not spend very large sums of money in objects for common use? Of course they do. I never can understand the assumption that underlies that kind of argument that only poor men spend their money on objects which are manufactured by the labouring population.

Mr. TINKER: The relatively rich men and women can buy more boots and shoes.

Mr. EMMOTT: That, of course, is a different argument, which is directed to the standard of living of the people. It is really a social, not an economic argument.

The DEPUTY-CHAIRMAN: We seem to be getting very far away from Income Tax.

Mr. EMMOTT: I fear I was the offender. Hon. Members who belong to the party that sits above the Gangway are always much concerned with the problem of purchasing power. Purchasing power is derived from labour. But it is not the business of Government to distribute purchasing power among the people by levying taxation upon one class of it. The function of Government is not to distribute purchasing power by means of taxation, but to pursue a policy which shall provide opportunities of labour for the labouring population.

The DEPUTY-CHAIRMAN: I think the hon. Member's speech would be more suitable to the Second Reading.

Mr. EMMOTT: I will not trespass further upon the time of the Committee. I conclude with this comment on the speech which the hon. Member for East Fulham made to the Committee. I am anxious to make it on account of the importance of the argument that he employed. The object of the expenditure of money is that it shall have the greatest possible return. Now who are the persons best qualified to ensure the attainment of that object, that money shall be spent with the best return? I say they are not the agents of Government, whether central or local.

Mr. WILMOT: Return to whom?

Mr. EMMOTT: To those who spend it. I say that the persons best qualified to secure this object are not the agents of Government, whether central or local, but the individual men and women whose constant preoccupation throughout the whole of their lives is the expenditure of money in such a manner as to bring in the greatest return. I would say in the words of a Victorian statesman who has been already quoted to-day, that the best policy that a Government can pursue is to leave money to fructify in the pockets of the people. The argument of the hon.
Member for East Fulham contains no substance whatever, and his attempt to undermine the position of the hon. Member for Huddersfield (Mr. Mabane) falls to the ground.

5.29 p.m.

Sir I. MACPHERSON: I listened very carefully to the arguments which have been put forward, but they all seem to be fallacious, and the fallacy seems to me what we used to call in the old days that of the unrelated middle. As a general proposition it is true that if you pay less money you have more to spend on other things, and from that point of view the commerce of the country is improved and more is consumed. What you need to do in the country is to create an additional amount of consuming power. I rose particularly to refer to one statement that was made. I cannot see any possible relation between the figures of unemployment and Income Tax from one year to another. In my judgment they have no reaction one on the other. I cannot understand the argument of the hon. Member for North Hammersmith (Mr. West). He said—and I took the liberty of interrupting him to ask him where he got his facts—that the Income Tax payer with an income of £2,000 a year only pays on the average 2s. in the £, or some such sum. That is not true, but that is the sort of statement that is very often made in the country, and more or less uneducated people all over the country are led to believe that people who pay direct taxation through Income Tax are not really paying what they are said to be paying. I would ask the hon. Member if he can point to a single case of a man with an income of £2,000 a year or over who is paying 3s. or less in the £. I defy him to do it, but that is the statement which has been made. I think the hon. Member said the figure was 2s., but in any case such a man has to pay what the Statute says he pays, and it is no use standing up in the House of Commons or on a public platform and saying that he is paying less, and that the ordinary payer of direct taxation is getting off by some manoeuvring on the part of the Chancellor of the Exchequer. The fact is that the man who is paying direct taxation is the most heavily taxed man in this country. I remember that when I began my political life, a quarter of a century ago, in this House, the indirect taxpayer paid 46 per cent., if I recollect
aright, of the total taxation, the remainder being paid by the direct taxpayer. Now the proportion is quite changed, and the direct taxpayer has to pay enormously more in proportion than the indirect taxpayer.

Sir A. M. SAMUEL: And he has to pay indirect taxation as well.

Sir I. MACPHERSON: Yes, he has to pay indirect taxation as well, so that the direct taxpayer is really doubly taxed. I rose merely to point out how dangerous it is to make a speech of that kind. It is all very well in the House of Commons, where it can be confuted, but it is wrong that speeches of that kind should be made in the country. I am challenging the hon. Member to produce a single case, whether from a blue-book or otherwise, of a man with an income of £2,000 a year or over who is charged in any way less than the amount which is due from him to the Exchequer, namely, 4s. 6d. in the £.

Mr. WEST: I said that, on income up to £2,000, the tax paid was 3s. in the £. I see that I was wrong. It is not 3s., but 3s. 2d. so that it is 2d. more than I said. To the extent of 2d. I apologise for my inaccuracy. If, however, the right hon. Gentleman will look at Table 38—

Sir I. MACPHERSON: The hon. Member's statement was, as I understood it, that the tax worked out at 2s. in the £ on an income of £2,000 or over.

Mr. WEST: No, up to £2,000. I think the OFFICIAL REPORT will show that was what I said—from £1,000 up to £2,000. With an income of £2,000, a married man pays at the rate of 3s. 4d. in the £, and the married man with an income of £1,950 pays at the rate of 3s.

Sir I. MACPHERSON: How many children are there?

Mr. WEST: Three children.

Mr. EVERARD: Is that earned income?

Mr. WEST: I think that, if the income is unearned, he pays a few coppers more. To the extent of 2d. I withdraw.

Mr. WILMOT: If the right hon. Gentleman will refer to the Chancellor of the Exchequer's financial statement, issued on the 15th April this year, he will see the effective rate of tax worked out for a large number of specimen incomes, and
as the figure for an income of £2,000 a year is given in every case, he will find that a married couple with three children and with an earned income of £2,000 a year pay an effective rate of 2s. 11d., so that my hon. Friend was not so far wrong after all.

Sir I. MACPHERSON: No doubt in certain specified cases it will be as the hon. Member says. I accept his statement, and apologise if I made a statement which I should not have made.

Mr. WEST: I understood the right hon. Gentleman to say that no hon. Member of this House should make such a statement, but I think he will realise the truth of the statement that I made.

Sir I. MACPHERSON: I am certain from what I see here, and from what the hon. Member and his colleague have said, that there are cases of that kind, but the general tone of the hon. Gentleman's speech seemed to indicate that anybody with an income of over £2,000 paid a little over 2s. in the £. That was the impression that was created. I am quite willing to admit that there are cases, and that the hon. Member has given a case—[HON. MEMBERS: "It is the average."] That is the point that I am making. It is not the average case, but is only so in certain special cases, and I say that it is wrong to create an impression that anyone with an income of £2,000 or over only pays at that rate. It happens in certain cases, where there is a family and so on, but on general principles it is wrong to make an assertion of that kind.

5.39 p.m.

Mr. BAILEY: I entirely agree with the observation of the right hon. Gentleman the Member for Ross and Cromarty (Sir I. Macpherson) that the speech of the hon. Member for North Hammersmith (Mr. West) was, I am sure unintentionally, a very misleading speech. I understood the hon. Member to state that a man with an income of £100 a year paid taxation at the rate of 11.9 per cent while a man with an income of £1,000 was paying only at the rate of 11.2 per cent. That was the hon. Member's statement as I understood it; perhaps he will correct me if I am misinterpreting him. He said a minute or two earlier that the man with £1,000 a year paid 2s. in the £ in Income Tax,
which the hon. Member seemed to think too low a rate. Assuming that the figure of 2s. is right, it represents a payment of 10 per cent. of the income in Income Tax alone, so that, if the hon. Member's statement is correct, the total of the rest of the taxation paid by the man with £1,000 a year is 1.2 per cent. Is that correct?

Mr. WEST: The case that I gave was that the man with an income of £100 pays 11.9 per cent., while the man with an income of £1,000 only pays 11.2 per cent. I tried to make it clear, however, that these figures were figures given by the Colwyn Committee, which consisted mainly of Conservatives, and they may not be true.

Mr. BAILEY: Evidently the hon. Member has sufficient respect for the Colwyn Committee to quote their statements, and before any Member quotes a statement like that, he ought to satisfy himself that it is true. I will try to persuade the hon. Member that it is inaccurate—I do not like the word "untrue," because I acquit the hon. Member of any intention to mislead. His statement is that a man with an income of £1,000 a year pays Income Tax at the rate of 10 per cent., so that the rest of his taxation only amounts to 1.2 per cent. of his income. If the hon. Member believes that, he is less intelligent than I give him credit for being. The taxpayer probably owns a motor car, the licence for which costs him £12 a year, or over 1 per cent. of his income, which alone makes his taxation over 11 per cent. In addition he has to bear all the burden of indirect taxation, which presses so hardly upon the poor.

Mr. WEST: I would point out that the Colwyn Committee's report was published in 1926 or 1927, about eight years ago, but the figure of 2s. for the effective rate on an income of £1,000 I took from this year's Report of the Income Tax Commissioners, and that, perhaps, may account for the discrepancy.

Mr. BAILEY: I will leave the hon. Member to find out for himself exactly where his mistake is. He was not, however, arguing about the position in 1926. His argument was that the rich, on the present basis of Income Tax, were enjoying a great improvement in their standard of life, while the poor, owing to the
increase of indirect taxation, were suffering a great fall in their standard of life—that the poor were worse off and the rich were better off. What was the relevance of introducing a statement made in 1926 if it does not apply to the present day? It is clear that a statement that, while a rich man pays taxation at the rate of 11 per cent., the poor man also pays at the rate of 11 per cent., would do infinite harm if it were believed in the country by people who cannot follow these things as we can. Such a statement, made with the authority of the hon. Member might be believed, when it is clearly inaccurate.

Miss RATHBONE: Will the hon. Member tell us whether he does or does not accept the Colwyn Committee as the authority for these figures? The figures quoted by the hon. Member for North Hammersmith are very well known. They have been quoted half a dozen times in the House before, and I brought them with me to-day just on the chance that they might come in useful. Everyone knows that since the time of the Colwyn Committee the incidence of indirect taxation as compared with direct has increased enormously, and the discrepancy between rich and poor is greater now than it was then.

Mr. BAILEY: I am much interested to hear the hon. Lady's statement. Quite candidly, I have not read the Colwyn Committee's Report, and therefore I neither accept nor reject it; but I say quite categorically that, if the Committee said what the hon. Member for North Hammersmith said, the Committee were talking nonsense. I am inclined to think that the hon. Lady may be wrong, though not, of course, intentionally. I cannot believe that the Colwyn Committee would have said that, where Income Tax was being paid at the rate of 10 per cent. of the total income, the whole of the taxation was only 11.9 per cent. The point is perfectly clear. I am not arguing as to whether the distribution of wealth is right or wrong. Speaking for myself, I hope there will be to some extent a transformation of wealth. But to say, as the hon. Member said, that during the last 30 years, owing to the system of taxation, the rich have become better off and the poor worse off, is a monstrous distortion of the facts.

The TEMPORARY CHAIRMAN (Mr. Entwistle): The hon. Member is now going much too wide. I must ask him to keep to the point.

Mr. BAILEY: I must apologise if, in replying to the arguments of hon. Members opposite, I have trespassed out of order. I hope that you will on that account excuse me. I have made it clear that there is no ground for criticising the Income Tax by saying that the Government have diminished the standard of the working classes by improving the standard of other classes. The second point in regard to which the hon. Gentleman objected to the present standard of Income Tax was, he said, that national spending was better than private spending. He evidently approves of more national spending and less private spending. I was interested in the speech of my hon. Friend the Member for Springburn (Mr. Emmott). It drew an intervention from the hon. Member for East Fulham (Mr. Wilmot), who said, I understood, that in many ways national spending was better than private spending.

Mr. WILMOT: The hon. Member is so inaccurate in nearly everything he has said that perhaps I may be allowed to correct him. I said "in many cases," which is a very different thing.

Mr. BAILEY: I accept the hon. Member's correction. Inaccuracy is getting rather catching in this House. It is not a very grave inaccuracy, after all. The hon. Member for East Fulham said that in many cases private spending was not as good as national spending. Does he think that in some cases private spending is better than national spending? If he does, it is an important admission on the part of hon. Members sitting upon those benches. The hon. Member for North Lambeth and the hon. Member will be able to settle the differences of opinion which their speeches have developed.

Mr. WILMOT: No one from Lambeth has spoken.

Mr. BAILEY: Again I was inaccurate.

The TEMPORARY CHAIRMAN: This is out of order, and the hon. Member has gone much beyond the scope of the Clause.

Mr. BAILEY: Again I must apologise to you, Mr. Entwistle. It is so difficult
to keep in order in answering the arguments of hon. Members opposite, but I suppose one ought not to answer their arguments. Whether they ought to have been allowed to put those arguments—

The TEMPORARY CHAIRMAN: The hon. Member is now reflecting upon the Chair. I was not in the Chair at the time, but it does not make the remarks of the hon. Member in order simply because some other remarks have been made. In any event, a point put by way of illustration cannot be debated at length when it is not relevant to the Clause.

Mr. LOGAN: Apologise again.

Mr. BAILEY: Certainly, I had no intention that my remarks should reflect upon the Chair, but upon hon. Members opposite. If, in fact, I did reflect upon the Chair, I exceedingly regret it. When the hon. Member for North Hammersmith—I must not be incorrect again—developed the question of the relationship between a high or a low Income Tax and employment and unemployment, he was perfectly right for once in saying that the rate of Income Tax has not necessarily any effect in itself upon unemployment or employment. You might have great unemployment with Income Tax at 4s. in the £, and a very prosperous time with Income Tax at 6s. in the £. The important point is that any sudden alteration in the channels of income definitely and adversely affects employment. If you were suddenly to raise the Income Tax from, say, its present level by 1s. 6d. you would take spending power out of the hands of certain classes who were giving employment and would not be able to put that spending power into other hands at once. That is the argument against a sudden change of Income Tax either upwards or downwards.
The cardinal mistake of hon. Members sitting upon the benches above the Gangway is that they believe in sudden changes, and it is those sudden changes which have not been prepared beforehand that destroy prosperity. It is essential that you should have stability so that the spending power of the community should not be too roughly diverted from one channel to another. It is obvious that at the present time Income Tax cannot be raised. Whatever the Socialists
may say about national spending being better than private spending, you cannot have national spending unless there is private earning, and you would not have private earning if you raised the Income Tax very much higher than it is at present. On the other hand, we seem to be getting on very well, and I see no reason whatever why the Income Tax should be lowered. If there is a surplus, it should be used for schemes for benefiting the poorer members of the community, and I should oppose any future Budget if I happened to be here—

Mr. PALING: A very necessary qualification.

Mr. BAILEY: A necessary qualification, or, shall I say, an optimistic forecast. I do not mind which way the hon. Member likes to have it. All who sit on these benches are genuinely concerned that the financial power of the community should be used for the benefit of all classes, and not only Income Tax payers. I resent the suggestion that hon. Members sitting on the benches opposite are the only custodians of the pockets of the working class. We who sit on these benches are anxious to see the time come—and some of us believe that the day will soon come—when the country will be able to perform great social experiments, when, we believe, the yield from Income Tax will enable us to finance these things. We believe that Income Tax will be the basis of these things in the future, provided the foundation of stability and confidence be secured. If hon. Members opposite ever came into office again that which happened before would happen again—national spending and unemployment increasing. The hon. and learned Member for East Bristol (Sir S. Cripps) has told us of the sort of crisis we should get. Just as hon. Members opposite are against this Clause standing part, those of us on these benches do not believe that at the present time taxation can be increased, nor do we believe that it should be lowered by a reduction of Income Tax. We are entirely in favour of the Clause standing as it is.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Clause 17 ordered to stand part of the Bill.

CLAUSE 18.—(Exemption from, and reduction of, tax in certain cases.)

5.53 p.m.

Mr. WILMOT: I beg to move, in page 15, line 2, to leave out "twenty-five," and to insert "fifty."
I would suggest that it would be for the convenience of the Committee that this Amendment and the two following Amendments standing in my name and in the names of my hon. Friends might be discussed together, as they are consequential. The Chancellor of the Exchequer, in his Budget statement this year, introduced a change in the method of computing Income Tax for the benefit of the small Income Tax payer who derived his income entirely from unearned income. He said that he wished to exempt the small income derived from investments which was not larger than £125 a year and give it the same privilege as was enjoyed by an earned income of that size. At the time I ventured to point out that while nobody begrudged this concession to these very poor people there was this in it, that it introduced a new principle which, if extended, would develop into a vicious and dangerous principle. The differentiation between earned and unearned income is a very sound one based upon a very real difference. It is based on the fact that it costs the income enjoyer more to earn an earned income than it does to receive an unearned income, and therefore there is an extra allowance made in the case of earned income. But in such small incomes as these the concession is one which all of us can easily support. We feel, however, that with the growth of indirect taxation, which, in spite of the somewhat confused speeches which we have heard, is generally admitted, indirect taxation presses most hardly upon the poorest people, and consequently we think that this exemption limit should be raised. The purpose of these Amendments is to raise the limit to £150 so that those with incomes of less than £150 shall be entirely free from Income Tax whether they have earned incomes or investment incomes.
Later on we have an Amendment to improve a little further the concession to earned income in order to maintain the very proper differentiation. The Chancellor of the Exchequer also made a kind of buffer arrangement so that there should
not be a steep step up as soon as the £125 limit was passed, and the second two Amendments are consequential upon the first Amendment in that they preserve the buffer arrangement so that there is not a steep rise immediately after the new limit of £150 has been passed. I urge the Committee to pass these Amendments and thus make provision for exemption from Income Tax of the very poor Income Tax payer, who is already very hardly pressed, has suffered already by losing a valuable proportion of his other allowances, pays a very heavy share, proportionately, of the new direct taxation, and is not in a position to maintain himself and his dependants and at the same time to pay any Income Tax at all.

5.58 p.m.

Sir A. M. SAMUEL: The hon. Gentleman opposite in moving his Amendment mentioned the words "earned and unearned income." Those words confuse me; they add to the sensation of confusion which I originally felt when I read this Clause. I rise not to debate the Amendment but to ask the Chancellor of the Exchequer to explain by paraphrase what this Clause, and especially Subsection (2), really means, so that we may know how to apply the Amendment. Last night my hon. Friend the Financial Secretary very rightly said that the Finance Bill does not aim at literary grace, but rather at exact definition. If this Clause aims at exact definition, I wonder what sort of a Clause this would be if it did not aim at exact definition. The Clause is very involved. May I ask my right hon. Friend the Chancellor of the Exchequer to be good enough to give it his attention for a moment? I am not blaming him or finding any fault with or criticising the Clause; I merely desire information. Sub-section (2) contains three conditionals. We are always asking for simplification of Income Tax, and here is a case of a new Clause being brought in which is so involved that I tried to analyse it for about two hours last night and failed to understand what Subsection (2) meant. It seems to have two meanings. In the first place there is the first conditional of "not being exempt." The second and third conditionals are:
proves that his total income is less than one hundred and forty pounds, shall be entitled to have the amount of Income Tax payable in repect of his total income,
and then
if it would but for the provisions of this Sub-section.
The whole Sub-section seems to turn on the third conditional—"would but for the provisions of this Sub-section." As I read Sub-section (2) the Clause has two meanings. One of them must be wrong. Does the rigmarole of Sub-section (2) mean that the tax payable on incomes between £125 and £140 shall not be more than one-fifth of the excess of £125? Or does it mean that the tax shall be equal to one-fifth of the excess? It is puzzling to know how the new Clause will operate, or whether it operates differently in respect of a married man and a single man. I understand, of course, that the reliefs and personal allowances must be taken into consideration, but I cannot make out whether the tax shall not be more than one-fifth or equal to one-fifth of the excess, or how earned or unearned income varies the tax payable.

Mr. HOLDSWORTH: On a point of Order. Are we discussing the Clause, or the first Amendment, or are we taking the three Amendments together?

The TEMPORARY CHAIRMAN: We are discussing the three Amendments together.

Sir A. M. SAMUEL: We cannot understand how the Amendments operate until we know what the Clause means. It is difficult to know how the Clause will affect the married man. The hon. Member opposite talked about earned and unearned income of the persons to be affected. How will the Clause affect the married man as differentiated from the single man? Apparently the married man will pay no tax under the Clause, but the single man will pay some tax after deducting allowances. I may be wrong in my analysis but no doubt the Chancellor of the Exchequer will explain the Clause in order that we may know what we are talking about.

6.3 p.m.

Mr. WEST: As the Clause stands, it means that if a person has, say, £140, he will not have to pay Income Tax on more than one-fifth of the difference between that sum and £125. In other words, if the income was £140, which would be £15 above the exemption limit, he would have to pay on one-fifth of that excess.
That is to say, his total Income Tax would not be more than £3—one-fifth of £15, the £15 being the difference between £125 and £140. That is a concession on past practice, and one which we are pleased to accept. A person with £150 a year or, roughly, £2 15s. a week, would have to pay £3 a year in Income Tax. Our Amendment does not propose to alter that, but to raise the limit to £200. Therefore a person with £200 a year would be charged on not more than one-fifth of the difference between £125 and £200. That is to say, he would not have to pay more than £15 a year until his income was above £200. Let me put the same principle in different figures. If our Amendment were accepted it would mean that a person whose wages were not more than £3 18s. a week would not pay more than £15 in Income Tax. I suggest that for a person who has less than £4 a week, if he pays £15 a year income Tax—

Mr. HOLDSWORTH: Fifteen pounds is the assessable income.

Mr. WEST: Income Tax on £15 assessable income would be very reasonable, and an improvement. I am not certain that I have properly understood the matter, but I think I am right in my understanding that the real principle is that the difference between £125 and £140 shall be increased to the difference between £140 and £200 and that not more than one-fifth of the assessable income shall be taxed.

6.7 p.m.

Mr. CHAMBERLAIN: I think I had better begin by trying to answer my hon. Friend the Member for Farnham (Sir A. M. Samuel), and to explain what the Clause means in its present form. It is not a Clause which deals with the married taxpayer, because he is already exempt by reason of his allowances, but when you come to the single taxpayer, then the exemption limit differs according to whether his income is investment income or earned income. If it is investment income a man with a total income of £125 would be entitled to a personal allowance of £100. If his income is £100 and his personal allowance amounts to £100, then the two are equal and he is exempt, but if his income is £125 he is liable to pay on the difference between the two. On the other hand, a man who
has an earned income of £125, has an earned income allowance of one-fifth, which allowance amounts to £25. That brings him down to £100, and as he has personal allowance of £100 he is exempt. Therefore, a man with an earned income of £125 is exempt, a man with an investment income of £125 is exempt up to £100. The man who has an investment income of £125 will now be exempt under the first Sub-section. I do not think my hon. Friend will have much difficulty in understanding that part of the Clause.
I think the problem is in the second Sub-section, which is a device intended to prevent what otherwise would happen, namely, that where you draw a line of this kind the moment you get over the line there is a big jump. For instance, the man who has purely investment income of £125 is exempt under Sub-section (1) but without Sub-section (2) the man who has an investment income of £126 would immediately become subject to Income Tax on the £26, and that would make a very big jump. I can illustrate the point by taking an easier example than £126. Let me take an investment income of £130. Apart from Sub-section (2), the person with an income of £130 would be liable to pay tax upon the £30, that is the excess over his personal allowance of £100. He would have to pay Income Tax on the £30 at 1s. 6d. in the pound, according to the new provisions of the Finance Bill, and that would be £2 5s. Under the provisions of Subsection (2) the tax is not to be more than one-fifth of the excess of £130 over £125, and as the excess of £130 over £125 is £5, one-fifth of that is only £1. Therefore, by the operation of Sub-section (2), instead of paying £2 5s. tax he will only pay £1. I hope that explanation makes the point clear.
The hon. Member for East Fulham (Mr. Wilmot) wishes to raise the exemption limit from £125 to £150. That would also involve an alteration in Sub-section (2) and he proposes the insertion of £200 instead of £140. In introducing his Amendment the hon. Member said that I had introduced a new principle, and that although the principle was not objectionable as long as it remained small, any extension of it would make it both vicious and dangerous. I was, therefore, astonished to hear him go on to say that he wished to extend it.

Mr. WILMOT: May I explain that the right hon. Gentleman is wrong there?

Mr. CHAMBERLAIN: I would rather not be interrupted. We are anxious to get on. It really is a question of whether there is money to go a little bit further with each one of these concessions. Hon. Members opposite have taken every concession that I have made, and they want to go a little bit further. Where I have given a concession of, say, £50 they want to make it £60, and they want to raise, say, £125 to £150, and so forth. We appreciate the reasons why they put down Amendments of that kind, but we cannot afford to go further than I have done. I cannot accept the Amendment. It would cost £1,000,000 in a full year. If I were to accept the Amendment I should have to take it out of something else, and I have no doubt that I should then incur the resentment and criticism of hon. Members opposite. In the circum-

stances I must ask the Committee to reject the Amendment.

Mr. WILMOT: On a point of explanation, I should like to correct one statement of the right hon. Gentleman. It is not true to say that having objected to the principle proposed I have sought to extend it. If I had done so, I should seek to extend the exemption to the unearned income without making a correspondingly increased exemption for the earned income. Seeing that on a later Clause in another Amendment I have removed the widening of that principle, I think the right hon. Gentleman will admit that he was not right in what he said.

Question put, "That the word 'twenty-five' stand part of the Clause."

The Committee divided: Ayes, 244; Noes, 59.

Division No. 238.]
AYES.
[6.13 p.m.


Agnew, Lieut.-Com. P. G.
Davidson, Rt. Hon. Sir John
Hudson, Robert Spear (Southport)


Albery, Irving James
Davies, Edward C. (Montgomery)
Hume, Sir George Hopwood


Amery, Rt. Hon. Leopold C. M. S.
Davison, Sir William Henry
Hurd, Sir Percy


Anstruther-Gray, W. J.
Denman, Hon. R. D.
Inskip, Rt. Hon. Sir Thomas W. H.


Apsley, Lord
Denville, Alfred
Iveagh, Countess of


Aske, Sir Robert William
Doran, Edward
Jackson, Sir Henry (Wandsworth, C.)


Astbury, Lieut.-Com. Frederick Wolfe
Dower, Captain A. V. G.
James, Wing.-Com. A. W. H.


Astor, Maj. Hn. John J. (Kent, Dover)
Drewe, Cedric
Jamieson, Rt. Hon. Douglas


Atholl, Duchess of
Dugdale, Captain Thomas Lionel
Jennings, Roland


Balley, Eric Alfred George
Eady, George H.
Jones, Sir G. W. H. (Stoke New'gton)


Baillie, Sir Adrian W. M.
Eastwood, John Francis
Jones, Henry Haydn (Merioneth)


Baldwin, Rt. Hon. Stanley
Ellis, Sir R. Geoffrey
Jones, Lewis (Swansea, West)


Balniel, Lord
Elmley, Viscount
Kerr, Hamilton W.


Barclay-Harvey, C. M.
Emmott, Charles E. G. C.
Kimball, Lawrence


Beaumont, M. W. (Bucks., Aylesbury)
Emrys-Evans, P. V.
Kirkpatrick, William M.


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Erskine-Bolst, Capt. C. C. (Blackpool)
Lamb, Sir Joseph Quinton


Benn, Sir Arthur Shirley
Essenhigh, Reginald Clare
Law, Sir Alfred


Bernays, Robert
Fielden, Edward Brocklehurst
Law, Richard K. (Hull, S. W.)


Blindell, James
Ford, Sir Patrick J.
Leech, Dr. J. W.


Boulton, W. W.
Fraser, Captain Sir Ian
Lees-Jones, John


Bowyer, Capt. Sir George E. W.
Fremantle, Sir Francis
Leighton, Major B. E. P.


Braithwaite, J. G. (Hillsborough)
Fuller, Captain A. G.
Lennox-Boyd, A. T.


Brass, Captain Sir William
Ganzoni, Sir John
Lewis, Oswald


Broadbent, Colonel John
Gibson, Charles Granville
Lindsay, Noel Ker


Brocklebank, C. E. R.
Gledhill, Gilbert
Lockwood, John C. (Hackney, C.)


Brown, Col. D. C. (N'th'l'd., Hexham)
Glossop, C. W. H.
Loder, Captain J. de Vere


Browne, Captain A. C.
Gluckstein, Louis Halle
Loftus, Pierce C.


Burghley, Lord
Grattan-Doyle, Sir Nicholas
Lovat-Fraser, James Alexander


Burgin, Dr. Edward Leslie
Gretton, Colonel Rt. Hon. John
Lumley, Captain Lawrence R.


Burnett, John George
Grigg, Sir Edward
Mabane, William


Campbell, Sir Edward Taswell (Brmly)
Gunston, Captain D. W.
MacAndrew, Lieut.-Col. Sir Charles


Campbell, Vice-Admiral G. (Burnley)
Guy, J. C. Morrison
MacDonald, Rt. Hon. J. R. (Seaham)


Cautley, Sir Henry S.
Hacking, Rt. Hon. Douglas H.
MacDonald, Malcolm (Bassetlaw)


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Hamilton, Sir George (Ilord)
Macdonald, Sir Murdoch (Inverness)


Cazalet, Thelma (Islington, E.)
Hannon, Patrick Joseph Henry
Macdonald, Capt. P. D. (I. of W.)


Chamberlain, Rt. Hon. N. (Edgbaston)
Harbord, Arthur
McEwen, Captain J. H. F.


Chapman, Sir Samuel (Edinburgh, S.)
Haslam, Henry (Horncastle)
McKie, John Hamilton


Chorlton, Alan Ernest Leofric
Headlam, Lieut.-Col. Sir Cuthbert
Maclay, Hon. Joseph Paton


Clayton, Sir Christopher
Hellgers, Captain F. F. A.
McLean, Dr. W. H. (Tradeston)


Cobb, Sir Cyril
Henderson, Sir Vivian L. (Chelmsford)
Macpherson, Rt. Hon. Sir Ian


Cochrane, Commander Hon. A. D.
Heneage, Lieut.-Colonel Arthur P.
Maitland, Adam


Cooper, A. Duff
Herbert, Capt. S. (Abbey Division)
Manningham-Buller, Lt.-Col. Sir M.


Cooper, T. M. (Edinburgh, W.)
Hills, Major Rt. Hon. John Waller
Margesson, Capt. Rt. Hon. H. D. R.


Craddock, Sir Reginald Henry
Holdsworth, Herbert
Martin, Thomas B.


Crookshank, Capt. H. C. (Gainsb'ro)
Hore-Belisha, Rt. Hon. Leslie
Mason, David M. (Edinburgh, E.)


Cross, R. H.
Hornby, Frank
Mason, Col. Glyn K. (Croydon, N.)


Crossley, A. C.
Horsbrugh, Florence
Mayhew, Lieut.-Colonel John


Cruddas, Lieut.-Colonel Bernard
Howard, Tom Forrest
Mellor, Sir J. S. P.


Dalkeith, Earl of
Hudson, Capt. A. U. M. (Hackney, N.)
Mills, Sir Frederick (Leyton, E.)


Mitchell, Harold P. (Br'tl'd & Chisw'k)
Russell, Albert (Kirkcaldy)
Thomas, Rt. Hon. J. H. (Derby)


Mitchell, Sir W. Lane (Streatham)
Russell, Alexander West (Tynemouth)
Thomas, James P. L. (Hereford)


Molson, A. Hugh Elsdale
Russell, Hamer Field (Sheffield, B'tside)
Thompson, Sir Luke


Morris-Jones, Dr. J. H. (Denbigh)
Russell, R. J. (Eddlsbury)
Thomson, Sir James D. W.


Morrison, G. A. (Scottish Univer'ties)
Rutherford, Sir John Hugo (Liverp'l)
Thorp, Linton Theodore


Moss, Captain H. J.
Salmon, Sir Isidore
Titchfield, Major the Marquess of


Munro, Patrick
Salt, Edward W.
Touche, Gordon Cosmo


Nation, Brigadier-General J. J. H.
Samuel, Sir Arthur Michael (F'nham)
Tryon, Rt. Hon. George Clement


O'Neill, Rt. Hon. Sir Hugh
Sandys, Duncan
Turton, Robert Hugh


Orr Ewing, I. L.
Savery, Servington
Wallace, Captain D. E. (Hornsey)


Peake, Osbert
Shepperson, Sir Ernest W.
Ward, Lt.-Col. Sir A. L. (Hull)


Pearson, William G.
Simmonds, Oliver Edwin
Ward, Irene Mary Bewick (Wallsend)


Peat, Charles U.
Simon, Rt. Hon. Sir John
Ward, Sarah Adelaide (Cannock)


Penny, Sir George
Sinclair, Col. T. (Queen's Unv., Belfast)
Waterhouse, Captain Charles


Percy, Lord Eustace
Smiles, Lieut.-Col. Sir Walter D.
Watt, Major George Steven H.


Perkins, Walter R. D.
Smith, Louis W. (Sheffield, Hallam)
Wayland, Sir William A.


Petherick, M.
Smith, Sir Robert (Ab'd'n & K'dlne, C.)
Wedderburn, Henry James Scrymgeour-


Peto, Sir Basil E. (Devon, Barnstaple)
Smithers, Sir Waldron
Wells, Sydney Richard


Pickthorn, K. W. M.
Somervell, Sir Donald
Williams, Charles (Devon, Torquay)


Pownall, Sir Assheton
Somerville, Annesley A. (Windsor)
Williams, Herbert G. (Croydon, S.)


Pybus, Sir John
Sotheron-Estcourt, Captain T. E.
Wills, Wilfrid D.


Raikes, Henry V. A. M.
Spears, Brigadier-General Edward L.
Wilson, Lt.-Col. Sir Arnold (Hertf'd)


Ramsay, T. B. W. (Western Isles)
Spencer, Captain Richard A.
Windsor-Clive, Lieut.-Colonel George


Ramsbotham, Herwald
Spens, William Patrick
Winterton, Rt. Hon. Earl


Ramsden, Sir Eugene
Stanley, Rt. Hon. Lord (Fylde)
Wise, Alfred R.


Reid, David D. (County Down)
Stanley, Rt. Hon. Oliver (W'morland)
Withers, Sir John James


Remer, John R.
Stewart, J. Henderson (Fife, E.)
Womersley, Sir Walter


Roberts, Sir Samuel (Ecclesall)
Stones, James
Worthington, Sir John


Ropner, Colonel L.
Strickland, Captain W. F.
Wragg, Herbert


Rosbotham, Sir Thomas
Stuart, Lord C. Crichton-



Ross Taylor, Walter (Woodbridge)
Sueter, Rcar-Admiral Sir Murray F.
TELLERS FOR THE AYES—


Ruggles-Brise, Colonel Sir Edward
Sugden, Sir Wilfrid Hart
Major Davies and Commander


Runge, Norah Cecil
Templeton, William P.
Southby.


NOES.


Adams, D. M. (Poplar, South)
Groves, Thomas E.
Rathbone, Eleanor


Addison, Rt. Hon. Dr. Christopher
Grundy, Thomas W.
Rea, Sir Walter


Attlee, Rt. Hon. Clement R.
Hamilton, Sir R. W. (Orkney & Zetl'nd)
Roberts, Aled (Wrexham)


Banfield, John William
Harris, Sir Percy
Salter, Dr. Alfred


Buchanan, George
Janner, Barnett
Samuel, Rt. Hon. Sir H. (Darwen)


Cove, William G.
Jenkins, Sir William
Sinclair, Maj. Rt. Hn. Sir A. (C'thness)


Cripps, Sir Stafford
Jones, Morgan (Caerphilly)
Smith, Tom (Normanton)


Daggar, George
Kirkwood, David
Strauss, G. R. (Lambeth, North)


Davies, David L. (Pontypridd)
Lansbury, Rt. Hon. George
Thorne, William James


Dobbie, William
Leonard, William
Tinker, John Joseph


Edwards, Sir Charles
Lunn, William
West, F. R.


Evans, Capt. Ernest (Welsh Univ.)
Macdonald, Gordon (Ince)
White, Henry Graham


Fcot, Isaac (Cornwall, Bodmin)
McEntee, Valentine L.
Williams, Edward John (Ogmore)


Gardner, Benjamin Walter
McGovern, John
Williams, Dr. John H. (Llanelly)


George, Major G. Lloyd (Pembroke)
Maclean, Neil (Glasgow, Govan)
Williams, Thomas (York, Don Valley)


George, Megan A. Lloyd (Anglesea)
Mainwaring, William Henry
Wilmot, John


Graham, D. M. (Lanark, Hamilton)
Mallalieu, Edward Lancelot
Wood, Sir Murdoch McKenzie (Banff)


Greenwood, Rt. Hon. Arthur
Maxton, James.



Grenfell, David Rees (Glamorgan)
Milner, Major James
TELLERS FOR THE NOES.—


Griffith, F. Kingsley (Middlesbro', W.)
Owen, Major Goronwy
Mr. Paling and Mr. John.


Griffiths, George A. (Yorks, W. Riding)
Pickering, Ernest H.

6.20 p.m.

Sir S. CRIPPS: I beg to move, "That the Chairman do report Progress, and ask leave to sit again."
I am moving to report Progress in order that the Chancellor of the Exchequer may let us know, if he can, how far he proposes to go to-night. It would probably be for the convenience of the Committee if he could give us this information at this stage, and it might expedite business.

Mr. CHAMBERLAIN: I am glad to respond to the request of the hon. and learned Member, as I think it would be to the advantage of the Committee if they had some idea as to how the time
can be distributed over the remaining business in the Committee stage. The main point is that we should complete the Committee stage by Monday night, and if there is an understanding in all quarters of the Committee, that we shall get the Committee stage and the new Clauses finished by Monday night, I shall be quite satisfied if we get to the bottom of page 2565 this evening, that is, the Amendment in the name of the hon. Member for South Croydon (Mr. H. Williams) dealing with residuary legacies to charitable institutions. That will, I hope, leave not more than can be completed at a convenient hour on Monday.

Sir S. CRIPPS: I am much obliged to the right hon. Gentleman, but I am afraid that we can give no promise as to Monday. If he looks at the Order Paper he will see that practically without exception the new Clauses are in the names of back benchers on his own side, not on this side. However, as far as we are concerned, we are quite prepared to co-operate and endeavour to finish the Bill on Monday night.

Sir WALTER REA: May I say that we entirely concur in the arrangement, and will do our best to carry it out.

Motion, by leave, withdrawn.

Clause ordered to stand part of the Bill.

CLAUSE 19.—(Personal allowance of married persons.)

6.23 p.m.

Major MILNER: I beg to move, in page 15, line 20, to leave out from "tax," to "shall," in line 22, and to insert "as personal allowance."
I have two other Amendments to this Clause both of which are consequential and, therefore, it might be convenient if I discuss them altogether, and in the event of it being necessary to take a vote to take it on the second Amendment, which is the main Amendment and proposes to restore the personal allowance to the figure at which it stood in 1931.

The TEMPORARY CHAIRMAN: Only the two first Amendments of the hon. and learned Member are to be called, and the hon. and learned Member can discuss them together. He cannot discuss the third Amendment which is not to be called.

Major MILNER: The Amendment I am now moving is introductory to the second, which is to leave out £170 and insert £225, in order to bring the personal allowance back to the pre-1931 Budget figure. In his Budget speech the Chancellor claimed a great deal of credit for the substantial help he was giving in this Bill to the smaller taxpayers and quoted Lord Snowden to the effect that the first relief should be given to those who suffered most severely in 1931. After all these preliminaries the Chancellor of the Exchequer is now making only a very small concession. I do not know why the third Amendment in my name, to substitute £135 for £100, has been ruled out
of order, because it deals with the case of a single man.

The TEMPORARY CHAIRMAN: It is not selected.

Major MILNER: The result of all this is that the Chancellor of the Exchequer has made a very small concession indeed in respect of the personal allowance. I have gone to some little trouble to get some comparative figures. The true comparison is between the position prior to October, 1931, and the position under the present proposals. Prior to 1931 a married couple without children with an income of £250 a year suffered an additional imposition of £6 5s. In his Budget the Chancellor of the Exchequer proposes to give him relief to the extent of £2 7s. 6d. In the case of a married couple without children and an income of £400, additional taxation of £10 8s. 4d. was imposed in 1931, and the Chancellor of the Exchequer now gives him relief to the extent of £5 12s. 6d.—only one-half. In the case of a married couple without children and an income of £500, additional taxation of £21 9s. 2d. was imposed in 1931, and the extent of the relief he gets under the present Bill is £5 1s. 3d.—one-quarter. That is not giving substantial help to this class of taxpayer; it is not giving relief to those who suffered most severely in 1931. This particular class of the community had heavier burdens placed upon them in 1931 than almost any other class except the very poor, and they have borne these heavier burdens for a longer time because they did not benefit in the reduction in the standard rate of tax.
In his Budget speech the Chancellor claimed that he was endeavouring to correct the position. He gave relief by a reduction in the standard rate last year, and is now proposing to give relief, which he agreed was more important, to the smaller taxpayer by means of the personal allowance. But I would point out that whereas last year the Chancellor of the Exchequer gave relief to the extent of £24,000,000 in a full year, he only gave relief this year to this particular class to the extent of £10,000,000, or rather less than half. In our view there can be no more necessary course to take than to put the personal allowance of this particular class of taxpayer back to the pre-1931 level. Merely to increase
the married people's allowance from £150 to £170 does not in any way meet the position.

6.31 p.m.

Mr. CHAMBERLAIN: I am interested to note that the hon. and gallant Member for South-East Leeds (Major Milner), speaking on behalf of his party, considers that the claims of this particular kind of Income Tax payer are entirely paramount, and apparently are to be preferred to those of the indirect taxpayer. I have never pretended for one moment that the concessions I was able to make in this Budget would put back the allowances on Income Tax to where they were before the Budget of 1931. What I have said is that I felt that the time had come when the taxpayers who were then so hard hit by the reduction of the allowances should have their turn, that I desired to give back what I could offer to the smaller taxpayer; and as far as I know what I proposed met with general approval throughout the country. It is true that I have not gone the whole way back to the former allowances, but when I tell the Committee that the proposal of this Amendment, even taking into account the fact that the first £135 of income is now taxed at only 1s. 6d. instead of 2s. 3d., would cost no less than £9,000,000 in a full year, the Committee will see how absolutely impossible it is for me to consider anything of the kind.

6.33 p.m.

Sir S. CRIPPS: I suppose that the right hon. Gentleman thought he had a good point or else he would not have made it when he said that we apparently preferred the small Income Tax payer to those who bear indirect taxation. The right hon. Gentleman must know very well that on all occasions, including today, we constantly put forward the argument that we believe taxation should be borne, as long as you have the present system, by those who are best able to bear the load. The indirect taxpayer is the least able, on the whole, to bear the load. When one is dealing with the problem of Income Tax, by which so much of the finances of the country are raised to-day, one has to examine, within the ambit of the Income Tax itself, how fairly the load is distributed, and it is no argument to say, as apparently the Chancellor now says, that the indirect taxation is too heavy and ought to be taken
off in order to allow the indirect taxpayers relief, rather than this small class of taxpayer. That apparently is the argument which he is now putting forward. When he puts it forward in his next Budget we shall be delighted to give him our support.
What I should have been interested to hear the Chancellor say was whether he intends as a matter of principle to go back to the 1931 scale as regards the allowances to the lower grades of Income Tax payers. He announced two or three years ago that his object in his Budget would be to put back progressively the different scales of people who had suffered as a result of the cuts in 1931. Here is a category which suffered very severely indeed by those cuts; and if his principle is to go back, does he intend to give these people the benefit of these remissions as soon as he can afford it? I shall be as interested as my hon. Friend the Member for Huddersfield (Mr. Mabane), who is trying to find out whether 4s. will be the standard rate next year, to know whether there is a chance, instead of the standard rate being 4s. next year, of our getting back the personal allowance which was in force before 1931, or whether it is the intention of the Chancellor to rearrange the burden as between Income Tax payers so that as now a larger proportion is borne by the poorer people.
It is quite true that it is difficult for the Chancellor suddenly to produce £9,000,000 out of his bag like a rabbit out of a hat. The right hon. Gentleman has been called a "movie star," but no one has accused him yet of being a conjurer, except perhaps in his own soliloquy when he said, "What, another surplus," as if it had indeed come out of a hat. We do not expect that, but we should like a declaration as to whether it is his intention, if he remains in charge of the finances of the country, to work back to the standard of Income Tax, the standards of burden which had been worked up to in the year 1931, or whether he contemplates restabilising the Income Tax system on the basis of the greater charge which now falls upon the poorer and the lesser proportionate charge which falls upon the richer people.

6.38 p.m.

Sir HERBERT SAMUEL: In last year's Budget, and again this year, I urged the claims of this particular class of taxpayer on the consideration of the
Chancellor of the Exchequer and of Parliament. This Amendment and the speech of the Chancellor to-day show quite clearly how far we are from restoring the pre-1931 position, so far as this class is concerned. It was the general opinion in the country that with the revival of prosperity which the country has experienced during the last year or two it had been possible to restore practically the whole of the cuts that were made under the pressure of the extreme financial necessity in 1931, and so far as cuts in wages and salaries are concerned that has been done, and so far as cuts in employment allowances are concerned it has been done. But here, with regard to the taxation of these smaller Income Tax payers, that has most certainly not been done. We pointed that out during the earlier stage of this Budget. Now the Chancellor has declared that even to carry out this one proposal would cost no less than £9,000,000; that is to say we are at least £9,000,000 short of the restoration, so far as the married people who are at the bottom of the Income Tax scale are concerned.
I think the Committee and the country should know that, and that we are still some distance away from the complete relief of the taxpayers at the bottom end of the scale, who are an extremely numerous class and a most deserving class and feel the weight of taxation much more than those in the higher ranks of the scale. When the Chancellor himself and leis colleagues continually impress upon the country how prosperous we are and how nearly completely the position has been restored, let it be remembered that this is an instance which shows that that is not so, and that there are still additional burdens placed upon the taxpayer which have not yet been relieved. I do not say that the precise scales that existed before 1931 were necessarily right and for all time. It may be that they are capable of adjustment in order to secure in some detailed particulars greater equity, and I am not now pleading for a simple restoration at every point of the scale of 1931. That may have to be the subject of consideration. But I do urge that, if not this year, at all events next year, further attention should be paid to this particular point, and that at the earliest
opportunity the necessary action should be taken to relieve from the burdens imposed by the extreme pressure of the financial situation the large body of taxpayers concerned.

6.43 p.m.

Mr. G. GRIFFITHS: I wish to support the Amendment. I wish also, if I can, to bring the Chancellor's mind back to his speech of 15th April last. He then said:
I realised quite well at the time that that proposal conferred a greater benefit upon the large taxpayer than upon the small, because of course to the small Income Tax payer the most important thing is the level of his personal allowances and reliefs.
When I heard the Chancellor make that statement I thought, "Well, there is something to follow later." In the same speech the Chancellor said that he proposed raising the Income Tax level for allowance from £150 to £170. I thought that that was a little bit of something. But later in the same speech the Chancellor said:
I am, therefore, proposing to clean the slate, and to make a full restoration from let July, the same date as that on which the corresponding change was made last year.—[OFFICIAL REPORT, 15th April 1935; cols 1633 and 1636, Vol. 300.]
But that is only cleaning the slate for certain purposes. It does not clean the slate for the people on whose behalf we are pleading. I see the Chancellor is smiling. I thought from that speech that he wished to put these people back to the £225 allowance, as they were before the economy cut was made. The hon. Member for Huddersfield (Mr. Mabane) has been pleading for the Income Tax payer who pays the standard rate, and for a reduction from 4s. 6d. to 4s. in the £. We are pleading for people who need a reduction in their taxes far more than the 4s. 6d. man. If the Chancellor has cleaned the slate as far as the salary cuts are concerned, he has not done so as far as the poorer Income Tax payer is concerned. He has raised it by £20, but in 1931 he reduced it by £75, namely, from £225 to £150.
I am told that we are ruling out the single man in this discussion and I am sorry for it, but I must point out that the £170 to the married man means that if that man is earning £3 5s. 6d. a week he comes under tax because £170 works out at £3 5s. 4½d. per week. On any
wages above that a man begins to be taxed although he already has to pay as much in indirect taxation as the man who has the 4s. 6d. in the £ Income Tax. Indeed I am not sure whether the man with the £3 5s. 6d. a week is not paying more in indirect taxation than the man with the 4s. 6d. in the £ Income Tax, because he has to buy things which are, in one sense, more heavily taxed. I am sorry that the Chancellor replied before the speech of the right hon. Gentleman the Member for Darwen (Sir H. Samuel). I do not imagine that my pleading for something from the rich man's table would count for very much, but I wish the right hon. Gentleman had waited a little longer before throwing up his arms in despair and telling us that this concession would cost £9,000,000. I hope that the right hon. Gentleman even yet will reconsider his decision and make some further allowance to these people who are the hardest-hit of all, to people such as the man and wife with rent of from 10s. to 14s. a week to pay and other family commitments. If the right hon. Gentleman is going to clean the slate, let him begin with the people at the bottom before he cleans the slate for the people at the top, and I ask him to consider raising this limit from £170 to £225.

6.48 p.m.

Mr. WILMOT: We realise that it would be almost impossible for the Chancellor to accept this Amendment, especially as it would cost £9,000,000, but we had hoped, indeed I think we had expected, that the right hon. Gentleman would take this opportunity of indicating that it was his intention to restore, as soon as possible, the Income Tax allowances to the level at which they stood before the second Budget of 1931. If he gave that undertaking now and carried it out he would be doing no more than implementing the promises which he very clearly implied at an earlier period. The promise that the standard rate of tax would be restored at the earliest opportunity to the pre-1931 level was carried out, and when that was done people were given clearly to understand that as soon as possible the small Income Tax payers'

allowances would be restored. It was a bitter disappointment when the Budget was unfolded this year and people found that only a very little distance in that direction had been travelled. When I remind the Committee that the £500 a year family which, in 1930, paid a tax of £3 19s. now pays a tax of £6 they will realise how little the Chancellor has done in the matter of restoration to the small Income Tax payer, though he has restored the standard rate which mostly affects the large Income Tax payers.

I appeal to the right hon. Gentleman again to give some indication that it is proposed at the earliest opportunity to make good what I and many others thought was the promise made last year. He tells us with great delight and much self-satisfaction, both in the House of Commons and on the screen that the Government have restored 80 per cent. of our prosperity, that the Budget has been balanced and that our finances have been put in good order. [HON. MEMBERS: "Hear, hear."] Yes, but we have learned to-day at whose expense it has been done. We know that, as to £9,000,000, it has come out of the pockets of the small Income Tax payers and out of the slender margin which is left to these people, after rent, insurance, and other occupational and family commitments have been met. It is the little man—"Henry Dubb," as he is sometimes called—who has had to pay. He is the fellow who has balanced the Budget and it is well that he should understand it. While the well-to-do have been placed virtually in the same position as they were in before 1931, the major contribution to the present financial position has been made by those who can least afford to pay.

Amendment negatived.

Major MILNER: I beg to move, in page 15, line 22, to leave out "one hundred and seventy," and to insert "two hundred and twenty-five."

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 248; Noes, 61.

Division No. 239.]
AYES.
[6.55 p.m.


Agnew, Lieut.-Com. P. G.
Apsley, Lord
Balley, Eric Alfred George


Albery, Irving James
Aske, Sir Robert William
Baillie, Sir Adrian W. M.


Amery, Rt. Hon. Leopold C. M. S.
Astbury, Lieut.-Com. Frederick Wolfe
Baldwin, Rt. Hon. Stanley


Anstruther-Gray, W. J.
Atholl, Duchess of
Balniel, Lord


Barclay-Harvey, C. M.
Heneage, Lieut.-Colonel Arthur P.
Procter, Major Henry Adam


Beaumont, M. W. (Bucks., Aylesbury)
Herbert, Capt. S. (Abbey Division)
Pybus, Sir John


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Hills, Major Rt. Hon. John Waller
Ralkes, Henry V. A. M.


Benn, Sir Arthur Shirley
Holdsworth, Herbert
Ramsay, T. B. W. (Western Isles)


Birchall, Major Sir John Dearman
Hore-Bellsha, Rt. Hon. Leslie
Ramsbotham, Herwald


Bilndell, James
Hornby, Frank
Ramsden, Sir Eugene


Boulton, W. W.
Horsbrugh, Florence
Reid, David D. (County Down)


Brass, Captain Sir William
Howard, Tom Forrest
Remer, John R.


Broadbent, Colonel John
Hudson, Capt. A. U. M.(Hackney, N.)
Roberts, Sir Samuel (Ecclesall)


Brocklebank, C. E. R.
Hudson, Robert Spear (Southport)
Ropner, Colonel L.


Brown, Col. D. C. (N'th'l'd, Hexham)
Hume, Sir George Hopwood
Rosbotham, Sir Thomas


Brown, Brig.-Gen. H. C. (Berks., Newb'y)
Inskip, Rt. Hon. Sir Thomas W. H.
Ross Taylor, Walter (Woodbridge)


Browne, Captain A. C.
Jackson, Sir Henry (Wandsworth, C.)
Ruggles-Brise, Colonel Sir Edward


Burghley, Lord
James, Wing.-Com. A. W. H.
Runge, Norah Cecil


Burnett, John George
Jamieson, Rt. Hon. Douglas
Russell, Albert (Kirkcaldy)


Campbell, Sir Edward Taswell (Brmly)
Jennings, Roland
Russell, Alexander West (Tynemouth)


Caporn, Arthur Cecil
Jones, Sir G. W. H. (Stoke New'gton)
Russell, Hamer Field (Shef'ld, B'tside)


Carver, Major William H.
Jones, Henry Haydn (Merioneth)
Russell, R. J. (Eddisbury)


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Jones, Lewis (Swansea, West)
Rutherford, Sir John Hugo (Liverp'l)


Cazalet, Thelma (Islington, E.)
Kerr, Hamilton W.
Salmon, Sir Isidore


Chamberlain, Rt. Hon. N. (Edgbaston)
Kimball, Lawrence
Salt, Edward W.


Chapman, Col. R.(Houghton-le-Spring)
Kirkpatrick, William M.
Samuel, Sir Arthur Michael (F'nham)


Chapman, Sir Samuel (Edinburgh, S.)
Lamb, Sir Joseph Quinton
Samuel, M. R. A. (W'ds'wth, Putney).


Chorlton, Alan Ernest Leofric
Law, Sir Alfred
Sandys, Duncan


Clayton, Sir Christopher
Law, Richard K. (Hull, S. W.)
Shaw, Captain William T. (Forfar)


Cobb, Sir Cyril
Leech, Dr. J. W.
Shepperson, Sir Ernest W.


Cochrane, Commander Hon. A. D.
Lees-Jones, John
Simmonds, Oliver Edwin


Colville, Lieut.-Colonel J.
Leighton, Major B. E. P.
Simon, Rt. Hon. Sir John


Cooper, A. Duff
Lennox-Boyd, A. T.
Sinclair, Col. T. (Queen's Unv., Belfast)


Cooper, T. M. (Edinburgh, W.)
Lewis, Oswald
Smiles, Lieut.-Col. Sir Walter D.


Craddock, Sir Reginald Henry
Lindsay, Kenneth (Kilmarnock)
Smith, Louis W. (Sheffield, Hallam)


Cranborne, Viscount
Lindsay, Noel Ker
Smith, Sir Robert (Ab'd'n & K'dine, C.)


Craven-Ellis, William
Lister, Rt. Hon. Sir Philip Cunliffe-
Somerville, Annesley A. (Windsor)


Crookshank, Capt. H. C. (Gainsb'ro)
Lockwood, John C. (Hackney, C.)
Somerville, D. G. (Willesden, East)


Croom-Johnson, R. P.
Loder, Captain J. de Vere
Sotheron-Estcourt, Captain T. E.


Cross, R. H.
Loftus, Pierce C.
Southby, Commander Archibald R. J.


Crossley, A. C.
Lovat-Fraser, James Alexander
Spencer, Captain Richard A.


Cruddas, Lieut.-Colonel Bernard
Lumley, Captain Lawrence R.
Spens, William Patrick


Dalkeith, Earl of
Mabane, William
Stanley, Rt. Hon. Lord (Fylde)


Davidson, Rt. Hon. Sir John
McConnell, Sir Joseph
Stanley, Rt. Hon. Oliver (W'morland)


Davison, Sir William Henry
McCorquodale, M. S.
Stewart, J. Henderson (Fife, E.)


Denman, Hon. R. D.
MacDonald, Rt. Han. J. R. (Seaham)
Stones, James


Denville, Alfred
MacDonald, Rt. Hon. M. (Bassetlaw)
Stourton, Hon. John J.


Doran, Edward
Macdonald, Sir Murdoch (Inverness)
Strickland, Captain W. F.


Dower, Captain A. V. G.
McEwen, Captain J. H. F.
Stuart, Hon. J. (Moray and Nairn)


Drewe, Cedric
McKie, John Hamilton
Stuart, Lord C. Crichton-


Dugdale, Captain Thomas Lionel
Maclay, Hon. Joseph Paton
Sueter, Rear-Admiral Sir Murray F.


Eady, George H.
McLean, Dr. W. H. (Tradeston)
Sugden, Sir Wilfrid Hart


Eastwood, John Francis
Macmillan, Maurice Harold
Templeton, William P.


Elliot, Rt. Hon. Walter
Macpherson, Rt. Hon. Sir Ian
Thomas, James P. L. (Hereford)


Ellis, Sir R. Geoffrey
Maitland, Adam
Thomson, Sir James D. W.


Elmley, Viscount
Manningham-Buller, Lt.-Col. Sir M.
Thompson, Sir Luke


Emrys-Evans, P. V.
Margesson, Capt. Rt. Hon. H. D. R.
Titchfield, Major the Marquess of


Entwistle, Cyril Fullard
Martin, Thomas B.
Touche, Gordon Cosmo


Essenhigh, Reginald Clare
Mason, David M. (Edinburgh, E.)
Tryon, Rt. Hon. George Clement


Flelden, Edward Brocklehurst
Mason, Col. Glyn K. (Croydon, N.)
Turton, Robert Hugh


Ford, Sir Patrick J.
Mayhew, Lieut.-Colonel John
Wallace, Captain D. E. (Hornsey)


Fraser, Captain Sir Ian
Mellor, Sir J. S. P.
Ward, Lt.-Col. Sir A. L. (Hull)


Fremantle, Sir Francis
Mills, Sir Frederick (Leyton, E.)
Ward, Irene Mary Bewick (Wallsend)


Fuller, Captain A. G.
Mitchell, Harold P. (Br'tf'd & Chisw'k)
Ward, Sarah Adelaide (Cannock)


Ganzoni, Sir John
Mitchell, Sir W. Lane (Streatham)
Waterhouse, Captain Charles


Gibson, Charles Granville
Molson, A. Hugh Elsdale
Watt, Major George Steven H.


Gillett, Sir George Masterman
Morris-Jones, Dr. J. H. (Denbigh)
Wayland, Sir William A.


Gledhill, Gilbert
Morrison, G. A. (Scottish Univer'ties)
Wedderburn, Henry James Scrymgeour-


Glossop, C. W. H.
Moss, Captain H. J.
Wells, Sydney Richard


Gluckstein, Louis Halle
Munro, Patrick
Williams, Charles (Devon, Torquay)


Grattan-Doyle, Sir Nicholas
Nation, Brigadier-General J. J. H.
Williams, Herbert G. (Croydon, S.)


Graves, Marjorle
O'Connor, Terence James
Wills, Wilfrid D.


Gretton, Colonel Rt. Hon. John
O'Neill, Rt. Hon. Sir Hugh
Wilson, Lt.-Col. Sir Arnold (Hertf'd)


Grigg, Sir Edward
Ormsby-Gore, Rt. Hon. William G. A.
Windsor-Clive, Lieut.-Colonel George


Gunston, Captain D. W.
Orr Ewing, I. L.
Winterton, Rt. Hon. Earl


Guy, J. C. Morrison
Patrick, Colin M.
Wise, Alfred R.


Hacking, Rt. Hon. Douglas H.
Peake, Osbert
Withers, Sir John James


Hamilton, Sir George (Ilford)
Pearson, William G.
Wolmer, Rt. Hon. Viscount


Hannon, Patrick Joseph Henry
Penny, Sir George
Womersley, Sir Walter


Harbord, Arthur
Percy, Lord Eustace
Wragg, Herbert


Haslam, Henry (Horncastle)
Petherick, M.



Headlam, Lieut.-Col. Sir Cuthbert
Peto, Sir Basil E. (Devon, Barnstaple)
TELLERS FOR THE AYES.—


Hellgers, Captain F. F. A.
Pickthorn, K. W. M.
Captain Sir George Bowyer and


Henderson, Sir Vivian L. (Chelmsford)
Pownall, Sir Assheton
Major Davies.


NOES.


Adams, D. M. (Poplar, south)
Banfield, John William
Cleary, J. J.


Addison, Rt. Hon. Dr. Christopher
Bevan, Aneurin (Ebbw Vale)
Cove, William G.


Attlee, Rt. Hon. Clement R.
Buchanan, George
Cripps, Sir Stafford




Daggar, George
Jones, J. J. (West Ham, Silvertown)
Rea, Sir Walter


Davies, David L. (Pontypridd)
Jones, Morgan (Caerphilly)
Roberts, Aled (Wrexham)


Dobbie, William
Kirkwood, David
Salter, Dr. Alfred


Edwards, Sir Charles
Lansbury, Rt. Hon. George
Samuel, Rt. Hon. Sir H. (Darwen)


Evans, Capt. Ernest (Welsh Univ.)
Leonard, William
Sinclair, Maj. Rt. Hn. Sir A. (C'thness)


Foot, Isaac (Cornwall, Bodmin)
Llewellyn-Jones, Frederick
Smith, Tom (Normanton)


Gardner, Benjamin Walter
Logan, David Gilbert
Strauss, G. R. (Lambeth, North)


George, Major G. Lloyd (Pembroke)
Lunn, William
Thorne, William James


George, Megan A. Lloyd (Anglesea)
Macdonald, Gordon (Ince)
Tinker, John Joseph


Graham, D. M. (Lanark, Hamilton)
McEntee, Valentine L.
West, F. R.


Greenwood, Rt. Hon. Arthur
Maclean, Neil (Glasgow, Govan)
White, Henry Graham


Grenfell, David Rees (Glamorgan)
Mainwaring, William Henry
Williams, Edward John (Ogmore)


Griffith, F. Kingsley (Middlesbro', W.)
Mallalieu, Edward Lancelot
Williams, Thomas (York, Don Valley)


Griffiths, George A. (Yorks, W. Riding)
Mander, Geoffrey le M.
Wilmot, John


Groves, Thomas E.

Wood, Sir Murdoch McKenzie (Banff)


Grundy, Thomas W.
Milner, Major James



Hamilton, Sir R. W.(Orkney & Zetl'nd)
Owen, Major Goronwy
TELLERS FOR THE NOES.—


Harris, Sir Percy
Pickering, Ernest H.
Mr. John and Mr. Paling.


Jenkins, Sir William
Rathbone, Eleanor

Clause ordered to stand part of the Bill.

CLAUSE 20.—(Deduction in respect of children.)

7.3 p.m.

Mr. MAINWARING: I beg to move, in page 15, line 31, after "words," to insert:
'sixty pounds' were substituted for the words 'fifty pounds' and as if the words.
The right hon. Gentleman the Member for Darwen (Sir H. Samuel), in relation to the last Amendment, referred to the fact that he was not desirous of seeking a simple restoration to the situation which existed prior to the Budget of 1931. It will be obvious to the Committee from the terms of the Amendment I now move that I do not seek a mere restoration, for the effect of this Amendment will be an improvement in the conditions of those people for whom we now seek to obtain an additional grant. Prior to the emergency of the autumn of 1931 the position in respect to the grant for children was £60 for the first child and £50 for a second. Then in the emergency Finance Act of that period the figures of £50 and £40 were substituted. In Clause 20 of this Finance Bill it is proposed to introduce a uniform figure of £50. In our Amendment we propose to substitute for that uniform £50 a uniform £60. That, I think, makes clear the position we seek to obtain. It will not be necessary to elaborate at any great length the deserving character of the section of the community that will be affected by this proposed Amendment. It is undoubtedly true to say that this would be the hardest hit section of the taxpaying community at the present time.
There is a failure generally to appreciate what the liability of children imposes on them. In terms of Finance Acts
children ought naturally to be an asset to the community, but to the parent they become something in the nature of a liability when estimation of what it costs to maintain a child is reduced to one of maintenance. There is a complete failure to appreciate what the parent himself would like to make of his child and what, indeed, he is obliged as an honourable parent to provide by way of education and so forth. Even in proposing this additional grant of relief to the extent of £60 per head of the children we do not feel we are going to the extent to which we ought to go in a, reasonable estimation of what the liabilities of a parent may be. While a great deal has been said on previous Amendments about the hardships imposed on this class of taxpayer, I feel that the case is far from being exhausted and one could dwell at very great length on the burden imposed upon them. But this has already been forcefully put elsewhere. I want to press on the Chancellor of the Exchequer the reasonableness of giving some serious consideration to the claims of this class, and to appeal to him, if it is in any way possible, to permit this minor Amendment, in the interest of this most deserving section.

7.8 p.m.

Miss RATHBONE: I would like to support this Amendment, though I admit I do so more in the hope, which other Members have expressed, that we shall succeed in eliciting from the Chancellor of the Exchequer some expression of his intentions for the future, than in any great expectation that we shall obtain this concession, modest though it is. Other hon. Members have dwelt upon the general position in which the family man is living, so I only want to add a few words. The position, as I see it, is this:
Last year the Chancellor of the Exchequer laid very great stress upon the statement that the principle on which he was operating was restitution in proportion to sacrifice; that is to say, that those who had made a sacrifice in the national emergency in 1931 should, as far as possible, receive back again proportionately. But in actual fact the result of the restitution of the standard rate of Income Tax, unaccompanied by any restoration of family allowances, was the very negation of that principle. Right through the scale we found that the man with children dependent upon him received in restitution less in proportion to his sacrifice than the man with no children dependent upon him, and the small taxpayer received less than the large taxpayer. The figures were so striking that I think they were brought home to every Member of the House.
This year we admit with some gratitude that a step has been taken towards restoring the position of the family man. The three concessions made by the Chancellor of the Exchequer should really be taken in combination to realise their effect, and, taking them in combination, so far as I can gather from the examples I have worked out—they, of course, vary according to the particular case—it amounts to this: that the cuts in the family allowances made in 1931 are, roughly speaking, restored to the extent of about one-half, or rather less; that is, when you take into account at the same time the lowering of the exemption limit. But in spite of that, the family man is still paying just about double what he paid previously to the 1931 Act. To take a single example, a man with £500 a year—I find I have not the particulars, so I will let the example go by, but I am sure the facts are familiar to the right hon. Gentleman. I think I remember them—a man with £500 a year, with a wife and three children to support, paid before the present Budget £13 10s. That is reduced, as a result of the three concessions made, to £6. Before 1931 that man paid only £3. Therefore, he is paying just double what he paid. I think these figures are right, but I know the proportions are about right. Passing from the case of the family man as compared with a bachelor, the present proposals are surely a very imperfect realisation of the statement of the right
hon. Gentleman that he intended to make concessions to the smaller taxpayer.

The DEPUTY-CHAIRMAN: We are not now having a general discussion on the allowances to the small taxpayers. I have been waiting for the hon. Lady to relate her argument to the Amendment now before the Committee which specifically refers to children.

Miss RATHBONE: I said that it was difficult to take this Amendment out of relation to the previous concessions made, in fairness to the right hon. Gentleman. The object of the Amendment is only to make a restitution of family allowances, and that taken alone is only going a very little way along the path towards the goal I am placing before the right hon. Gentleman—that he ought at least to bring back the position of the man with dependent children to a position not less good than under the Act of 1931; otherwise, how can he say that he is carrying out his oft-reiterated principle of restitution in proportion to sacrifice? The judge, the Cabinet Minister, the Member of Parliament, the higher paid civil servant—have all had restitution made to them of the whole amount of their sacrifices in 1931. The poor small Income Tax payer, with a dependent family, has had a restoration of the sacrifice he then made to the extent of about one-half or less. I do not see how it can be maintained that the principle of restitution in proportion to sacrifice is being carried out. If you take the married man with three children, if his income is £600 a year he is now paying 37 per cent. more than he did in 1931, but a man with a similar family and an unearned income of £2,000 is paying only 5 per cent. more than he paid in 1931.

The DEPUTY-CHAIRMAN: I must ask the hon. Lady to keep to the Amendment.

Miss RATHBONE: I will say no more about the question of restitution in proportion to sacrifice, though I did think it was relevant to point out, as part of the case for this Amendment, that the Chancellor of the Exchequer laid down that principle. May I, as the Amendment refers specifically to children's allowances, make one more point? I noticed with very great interest and with a, glow of satisfaction that in the Budget Speech the Chancellor had been moved to
make concessions to the family man by the anxiety he felt as to the steady decline in the birth-rate. He said he regarded that with some apprehension. Indeed, he well may, when we bear in mind that according to a very cautious expert this country at present fails to replace itself by about 25 to 30 per cent.; that is to say, at the present rate of decline the population will decrease by between 25 and 30 per cent. in 30 years. That has alarmed the right hon. Gentleman, and he wants to put a brake on the decline in the birth-rate, but it is a very modest brake, and it will not hold. In effect, after the first child, he increases the amount on which the family man gets exemption by £10 in respect of each child. As far as I can calculate, the real value of that concession is something like 10d. a week per child, and I wonder how many potential parents will be encouraged to indulge in the adventure of parenthood by the prospect of paying an average amount of 10d. a week less in taxation in respect of each child. I hope that at any rate the Chancellor of the Exchequer will be able to give us some assurance that if he occupies the place which he now occupies by the time the next Budget is introduced, we may look to see restoration of the whole of the sacrifices made in 1931.

7.17 p.m.

Mr. CHAMBERLAIN: It is a new doctrine, but one which has been repeated several times during the discussion of the last few Amendments, that the Chancellor of the Exchequer, in discussing the Finance Bill of the year, is expected to give pledges as to what he is going to do in the Budget of the following year. I utterly decline to reveal to the Committee at this stage what I am going to do when I bring in my Budget proposals next year. I do not at present know what the conditions may be, and of course I cannot be quite certain whether I shall be Chancellor of the Exchequer next year. All I can say is that the considerations which have been put before me in connection with the partial restoration of Income Tax allowances will no doubt not be lost sight of by me when I do come to frame my next Budget. I am not going to follow the hon. Lady the Member for the English Universities (Miss Rathbone), who has just addressed the Committee, on the question of how far I have fulfilled promises or pledges which I gave in
the course of my speeches on this Budget or on the Budget of the preceding year. I would ask her not to pick out particular phrases or particular portions of my speeches and rely upon them alone, but to read the speeches as a whole, and I am confident that she will not find anything that is inconsistent with those speeches in the action which I am now taking. I have always been careful not to pledge myself either to make an exact restoration of the sacrifices called for in 1931 or to make such restorations as I could make at any particular period of time.
As to the Amendment now before the Committee, the hon. Member for East Rhondda (Mr. Mainwaring) very fairly recognised that this was no question of restoration to the pre-1931 position, which is another illustration of the practice of the Opposition to which I have drawn attention, whereby they seek to secure an increase in each of the concessions that I have found it possible to propose. The children's allowance is £50 for the first child and £40 for the second. I propose to make it £50 for each child. To put down an Amendment to make it £60 for each child has no justification on any other ground except that of adding £10 to the particular proposal contained in the Bill. I may recall the report of the Royal Commission in 1920, when the cost of living was considerably higher than it is to-day. The recommendations they made for allowances in respect of children were, I think, only £36 for the first child and £27 for the other children. I do not think it can be denied that an allowance of £50 for each child is a generous one in its effect on the taxpayer with a small income. If we are to have any sort of regard to the actual increased burden upon the household by reason of the fact that there is a child to support and maintain, I say that in the case of the small income £50 is a generous allowance. To make that allowance £60, as proposed, would cost another £2,000,000 a year.

7.21 p.m.

Sir S. CRIPPS: I want to correct one thing that the right hon. Gentleman has said. It is not quite right to say that there is no argument here except for adding £10 to what the Government have done. I think I am right in saying that the 1931 figure for the first child was £60, and, therefore, so far as the young
married couple with one child is concerned, which is the case that is often taken, the Chancellor of the Exchequer's concession does not put it back to what it was in 1931. When you get to two children or more, the position is never as good as it was in 1931, but it is nearer when you average it out over a number of children than it is when you merely take the first child. Therefore, although this Amendment goes beyond the 1931 position by giving £60 for the second child instead of the £50 that was then laid down, it is an attempt, by utilising the same principle that is in the Bill, and without altering that principle, to put back the allowance as regards the first child to the position that obtained in 1931. I do not think the right hon. Gentleman can say that in 1931 prices were so different from what they are today, or that the allowances were so

extravagant that there was no justification for them. Surely the experience of four years has not been to make people think less of the allowances that are necessary for children. I should have thought that all the experience of the last four years had rather emphasised the necessity for generous allowances in regard to children. We therefore say that this is another instance where the cleaning of the slate has not occurred, where you are not getting back to the 1931 level. Although the Income Tax payer with the tax at 4s. 6d. has got back to it, this is one of the cases where people who have to pay Income Tax deserve it more than any others, and we shall therefore vote in favour of the Amendment.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 53; Noes, 238.

Division No. 240.]
AYES.
[7.25 p.m.


Adams, D. M. (Poplar, South)
Griffiths, George A. (Yorks, W. Riding)
Pickering, Ernest H.


Addison, Rt. Hon. Dr. Christopher
Grundy, Thomas W.
Rathbone, Eleanor


Attlee, Rt. Hon. Clement R.
Hamilton, Sir R. W. (Orkney & Zetl'nd)
Rea, Sir Walter


Banfield, John William
Harris, Sir Percy
Roberts, Aled (Wrexham)


Bevan, Aneurin (Ebbw Vale)
Janner, Barnett
Salter, Dr. Alfred


Cleary, J. J.
Jones, Morgan (Caerphilly)
Samuel, Rt. Hon. Sir H. (Darwen)


Cove, William G.
Kirkwood, David
Smith, Tom (Normanton)


Cripps, Sir Stafford
Lansbury, Rt. Hon. George
Strauss, G. R. (Lambeth, North)


Dagger, George
Leonard, William
Thorne, William James


Davies, David L. (Pontypridd)
Logan, David Gilbert
Tinker, John Joseph


Dobbie, William
Lunn, William
West, F. R.


Edwards, Sir Charles
Macdonald, Gordon (Ince)
White, Henry Graham


Evans, Capt. Ernest (Welsh Univ.)
McEntee, Valentine L.
Williams, Edward John (Ogmore)


Gardner, Benjamin Walter
Maclean, Neil (Glasgow, Govan)
Williams, Thomas (York, Don Valley)


George, Major G. Lloyd (Pembroke)
Mainwaring, William Henry
Wilmot, John


Graham, D. M. (Lanark, Hamilton)
Mallalieu, Edward Lanceiot



Greenwood, Rt. Hon. Arthur
Milner, Major James
TELLERS FOR THE AYES.—


Grenfell, David Rees (Giamorgan)
Owen, Major Goronwy
Mr. John and Mr. Groves.


Griffith, F. Kingsley (Middlesbro', W.)
Paling, Wilfred



NOES.


Agnew, Lieut.-Com. P. G.
Caporn, Arthur Cecil
Dower, Captain A. V. G.


Albery, Irving James
Carver, Major William H.
Drewe, Cedric


Amery, Rt. Hon. Leopold C. M. S.
Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Dugdale, Captain Thomas Lionel


Apsley, Lord
Chamberlain, Rt. Hon. N. (Edgbaston)
Eady, George H.


Aske, Sir Robert William
Chapman, Col. R. (Houghton-le-Spring)
Eales, John Frederick


Astbury, Lieut.-Com. Frederick Wolfe
Chapman, Sir Samuel (Edinburgh, S.)
Eastwood, John Francis


Atholl, Duchess of
Chorlton, Alan Ernest Leofric
Ellis, Sir R. Geoffrey


Bailey, Eric Alfred George
Clayton, Sir Christopher
Emrys-Evans, P. V.


Balille, Sir Adrian W. M.
Cobb, Sir Cyril
Entwistle, Cyril Fullard


Baldwin, Rt. Hon. Stanley
Cochrane, Commander Hon. A. D.
Essenhigh, Reginald Clare


Belniel, Lord
Colville, Lieut.-Colonel J.
Fleiden, Edward Brocklehurst


Barclay-Harvey, C. M.
Cooper, A. Duff
Ford, Sir Patrick J.


Beaumont, M. W. (Bucks., Aylesbury)
Cooper, T. M. (Edinburgh, W.)
Fraser, Captain Sir Ian


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Craddock, Sir Reginald Henry
Fremantle, Sir Francis


Benn, Sir Arthur Shirley
Cranborne, Viscount
Fuller, Captain A. G.


Boulton, W. W.
Craven-Ellis, William
Ganzoni, Sir John


Bowyer, Capt. Sir George E. W.
Crookshank, Col. C. de Windt (Bootle)
Gibson, Charles Granville


Braithwaite, J. G. (Hillsborough)
Crookshank, Capt. H. C. (Gainsb'ro)
Gillett, Sir George Masterman


Brass, Captain Sir William
Cross, R. H.
Gledhill, Gilbert


Broadbent, Colonel John
Crossley, A. C.
Glossop, C. W. H.


Brocklebank, C. E. R.
Cruddas, Lieut-Colonel Bernard
Gluckstein, Louis Halle


Brown, Col. D. C. (N'th'l'd., Hexham)
Dalkeith, Earl of
Glyn, Major Sir Ralph G. C.


Brown, Brig.-Gen. H. C. (Berks., Newb'y)
Davidson, Rt. Hon. Sir John
Gower, Sir Robert


Browne, Captain A. C.
Davies, Maj. Geo. F. (Somerset, Yeovil)
Gretton, Colonel Rt. Hon. John


Burghley, Lord
Davison, Sir William Henry
Grigg, Sir Edward


Burgin, Dr. Edward Leslie
Denman, Hon. R. D.
Gunston, Captain D. W.


Burnett, John George
Denville, Alfred
Guy, J. C. Morrison


Hacking, Rt. Hon. Douglas H.
Macquisten, Frederick Alexander
Salt, Edward W.


Hannon, Patrick Joseph Henry
Maitland, Adam
Samuel, Sir Arthur Michael (F'nham)


Harbord, Arthur
Manningham-Buller, Lt.-Col. Sir M.
Samuel, M. R. A. (W'ds'wth, Putney)


Harvey, George (Lambeth, Kenningt'n)
Margesson, Capt. Rt. Hon. H. D. R.
Sandys, Duncan


Haslam, Henry (Horncastle)
Martin, Thomas B.
Shaw, Captain William T. (Forfar)


Haslam, Sir John (Bolton)
Mason, David M. (Edinburgh, E.)
Shepperson, Sir Ernest W.


Headlam, Lieut.-Col. Sir Cuthbert
Mason, Col. Glyn K. (Croydon, N.)
Simon, Rt. Hon. Sir John


Hellgers, Captain F. F. A.
Mayhew, Lieut.-Colonel John
Sinclair, Col. T.(Queen's Unv., Belfast)


Heneage, Lieut.-Colonel Arthur P.
Mellor, Sir J. S. P.
Smiles, Lieut.-Col. Sir Walter D.


Herbert, Capt. S. (Abbey Division)
Mitchell, Harold P. (Br'tf'd & Chisw'k)
Smith, Louis W. (Sheffield, Hallam)


Holdsworth, Herbert
Mitchell, Sir W. Lane (Streatham)
Smith, Sir Robert (Ab'd'n & K'dine, C.)


Hope, Capt. Hon. A. O. J. (Aston)
Molson, A. Hugh Elsdale
Somerville, Annesley A. (Windsor)


Hornby, Frank
Monsell, Rt. Hon. Sir B. Eyres
Somerville, D. G. (Willesden, East)


Horsbrugh, Florence
Morris-Jones, Dr. J. H. (Denbigh)
Sotheron-Estcourt, Captain T. E.


Howard, Tom Forrest
Morrison, G. A. (Scottish Univer'ties)
Southby, Commander Archibald R. J.


Hudson, Capt. A. U. M.(Hackney, N.)
Muirhead, Lieut.-Colonel A. J.
Spencer, Captain Richard A.


Hudson, Robert Spear (Southport)
Munro, Patrick
Spens, William Patrick


Hume, Sir George Hopwood
Nail, Sir Joseph
Stanley, Rt. Hon. Oliver (W'morland)


Inskip, Rt. Hon. Sir Thomas W. H.
Nation, Brigadier-General J. J. H.
Stewart, J. Henderson (Fife, E.)


James, Wing-Com. A. W. H.
O'Connor, Terence James
Stones, James


Jamieson, Rt. Hon. Douglas
O'Neill, Rt. Hon. Sir Hugh
Stourton, Hon. John J.


Jennings, Roland
Ormsby-Gore, Rt. Hon. William G. A.
Strickland, Captain W. F.


Jones, Sir G. W. H. (Stoke New'gton)
Peake, Osbert
Stuart, Lord C. Crichton-


Jones, Henry Haydn (Merioneth)
Pearson, William G.
Sugden, Sir Wilfrid Hart


Jones, Lewis (Swansea, West)
Penny, Sir George
Templeton, William P.


Kimball, Lawrence
Percy, Lord Eustace
Thomas, James P. L. (Hereford)


Kirkpatrick, William M.
Perkins, Walter R. D.
Thomson, Sir James D. W.


Lamb, Sir Joseph Quinton
Petherick, M.
Thompson, Sir Luke


Law, Sir Alfred
Peto, Sir Basil E. (Devon, Barnstaple)
Titchfield, Major the Marquess of


Law, Richard K. (Hull, S. W.)
Pickthorn, K. W. M.
Todd, A. L. S. (Kingswinford)


Leech, Dr. J. W.
Pownall, Sir Assheton
Touche, Gordon Cosmo


Lees-Jones, John
Procter, Major Henry Adam
Tryon, Rt. Hon. George Clement


Leighton, Major B. E. P.
Pybus, Sir John
Turton, Robert Hugh


Lennox-Boyd, A. T.
Raikes, Henry V. A. M.
Ward, Lt.-Col. Sir A. L. (Hull)


Levy, Thomas
Ramsay, T. B. W. (Western Isles)
Ward, Irene Mary Bewick (Wallsend)


Lewis, Oswald
Ramsbotham, Herwald
Ward, Sarah Adelaide (Cannock)


Lindsay, Kenneth (Kilmarnock)
Ramsden, Sir Eugene
Waterhouse, Captain Charles


Lindsay, Noel Ker
Reid, David D. (County Down)
Watt, Major George Steven H.


Lister, Rt. Hon. Sir Philip Cunliffe-
Reid, William Allan (Derby)
Wayland, Sir William A.


Lloyd, Geoffrey
Romer, John R.
Wedderburn, Henry James Scrymgeour-


Lockwood, John C. (Hackney, C.)
Roberts, Sir Samuel (Ecclesall)
Wells, Sydney Richard


Loftus, Pierce C.
Robinson, John Roland
Williams, Charles (Devon, Torquay)


Lovat-Fraser, James Alexander
Ropner, Colonel L.
Williams, Herbert G. (Croydon, S.)


Lumley, Captain Lawrence R.
Rosbotham, Sir Thomas
Wills, Wilfrid D.


Mabane, William
Ross Taylor, Walter (Woodbridge)
Wilson, Lt.-Col. Sir Arnold (Hertf'd)


McCorquodale, M. S.
Ruggles-Brise, Colonel Sir Edward
Winterton, Rt. Hon. Earl


MacDonald, Rt. Hon. J. R. (Seaham)
Runge, Norah Cecil
Wise, Alfred R.


MacDonald, Rt. Hon. M. (Bassetlaw)
Russell, Albert (Kirkcaldy)
Withers, Sir John James


Macdonald, Sir Murdoch (Inverness)
Russell, Alexander West (Tynemouth)
Womersley, Sir Walter


McEwen, Captain J. H. F.
Russell, Hamer Field (Sheffield, B'tside)
Worthington, Sir John


McKie, John Hamilton
Russell, R. J. (Eddisbury)
Wragg, Herbert


Maclay, Hon. Joseph Paton
Rutherford, Sir John Hugo (Liverp'l)



McLean, Dr. W. H. (Tradeston)
Salmon, Sir Isidore
TELLER OF THE NOES.—




Mr. Blindell and Mr. James Stuart.

7.35 p.m.

Mr. TINKER: I beg to move, in page 15, line 34, at the end, to add:
and as if after the words 'is receiving full-time instruction at any university, college, school, or other educational establishment' there were inserted the words 'or is serving an unpaid apprenticeship to any trade or occupation'.
In 1920 the House of Commons decided that the parents of children sent to a university, college, school or other educational establishment should have special privileges in respect of Income Tax. I take it that that was because the parents would not be getting any gain from them and would be put to some expense in order to further the children's education, to prepare them for the future, and to make them of some use in the community. That is a sound principle. In moving this Amendment,
we have in mind another kind of child who may not be able to go to a university, whose parents put him to an apprenticeship or article him to a profession. In some cases parents have to pay a premium, and the child does not get any payment by way of wages. The purpose we have in mind is to give the child a better chance in life. If the desire of the House of Commons in 1920 was to help parents to further the education of their children, we would be well advised to give relief to parents who put their children to apprenticeships which will help them in later years. I cannot inform the Chancellor what the cost of this concession would be, but I do not imagine it would be very much. I do not think there are many people in my class who are able to put their children to apprenticeship, for they have to start
earning early. It applies mostly to the middle class. As this Amendment furthers the principle to which the House has agreed, I think that it will be acceptable to all parties.

7.38 p.m.

Mr. CLEARY: Our intention in moving this Amendment is to bring in the same category as the child now enjoying full-time instruction after the age of 14 the child who is serving an unpaid apprenticeship, which is really another form of education. While a child at a school or college is being educated and prepared to be equipped for some walk in life, the child who is apprenticed to a trade is being similarly prepared for the technical side of life and will presumably, all other things being equal, make the same contribution to society in general. Taking the two classes, perhaps the greater sacrifice is made by the parents who enable their child to take an unpaid apprenticeship, for in the majority of cases they belong to the artisan class, and they can ill afford to do without the wage that might in other circumstances be brought in by the child. They need some consideration and sympathy because of the sacrifices they are making in the interests, not only of the child, but indirectly of the country as a whole. In consequence of the greater sacrifice, there is greater need of relief.
In many cases it is not only an unpaid apprenticeship, but money is actually paid by way of premium and articles. For a period of three or five years, and sometimes seven years, the children receive no financial recompense, but the parents pay a premium for the technical and expert knowledge that is given. By paying a premium the parents are on all fours with the parents whose child's education is being paid for in a secondary school. The law differentiates between the class in which the child is being kept at school after the age of 14 and the class where the child is sent to a trade and no wage is received, but the latter child, in the same way as the other child, is receiving some kind of education and in many cases is paying for it.
The plea in the Amendment is for simple justice. I find it difficult to appreciate that any solid argument can
be made against the Amendment. We expect an argument in reply to our case will be made on financial grounds, but we also hope an argument will be made to meet our case that there is unfair differentiation against those parents in thousands of families who allow their children, for the benefit of the children and, indirectly, for the benefit of the country, to receive a technical education but no wages. They should be treated in the same way as children who are kept at school and who only receive in another way education similar to that which is given through the unpaid apprenticeship system.

7.44 p.m.

Mr. D. MASON: I hope that the Chancellor will favourably consider this very modest request. It will help those who are deserving of it. The fair and modest way in which the hon. Members put their case should appeal to the right hon. Gentleman. It is not a great concession to ask. It is a long time since the right hon. Gentleman has made any concessions. I have supported the Chancellor, at times in opposition to my own leader, in regard to allowances, but I do think that this is a case where he might make a graceful concession to most deserving cases.

7.45 p.m.

Mr. LOGAN: I would like to put a question to the Chancellor on how wide an interpretation is to be given to this Amendment. I take it that if accepted it would embrace not only those engaged in the professions but also those occupied in industry. If that is so, I should like to say that I have yet to learn that in the marine workshops we have indentured apprentices who are not getting paid, and I do not think there are many unpaid apprentices in industry. In the case of the professions, however, we have this situation: the son of poor parents, after a promising career at a secondary school and afterwards at a university, may wish to enter one of the professions. In many cases he will receive no pay whatever and in some cases a premium will have to be paid, and the parents will find great difficulty in maintaining their son during the period of his professional training. It is particularly hard that a boy with special qualifications should be debarred from entering a profession by reason of the poverty of his parents. In
such cases it is of little use to him to have received a good secondary school and university education.

7.47 p.m.

Sir JOSEPH NALL: I would urge that this Amendment raises a principle which merits very careful consideration, though it may not provide the best means of giving effect to the views which have been put forward. There is a complaint these days of a shortage of skilled workers, and while that shortage is mainly due to the depression which has existed in certain trades it is accentuated by the constant drift of the children of manual workers into black-coated or non-manual occupations, and at a time when it is desirable to induce intelligent lads to take up manual occupations it would surely be wise to encourage parents to put them into trades where they will acquire skill and craftsmanship and in which an increasing degree of intelligence will be required as time goes on. It is obvious that in some industries the need to increase the number of skilled craftsmen will become acute, and the more we can encourage intelligent youths to take up skilled manual work rather than unskilled ocupations in offices and the like the better it will be for industry. I urge my right hon. Friend to give sympathetic consideration to the principle behind this Amendment.

7.50 p.m.

Mr. BANFIELD: I wish to support the case which has been put up for this Amendment. As a man who served his apprenticeship and who has always believed that much of the greatness of our country is to be attributed to the skill and craft of our workers, I feel that it would be a very fine thing if the Chancellor of the Exchequer could see his way to accept this Amendment. The other day I heard the Lord Provost of Glasgow declare at a meeting that one of the greatest difficulties with which they were faced on the Clyde at the moment arose from the fact that they had neglected to keep up the number of apprentices during the last seven or eight years. As a result they were feeling the effects of a lack of that workmanship and craftsmanship which is so desirable. It would be well worth the while of the Chancellor of the Exchequer, in the national interest, to make a gesture to parents to persuade
them to put their boys into skilled trades, so that ulmitately we might reap the benefit of having more of those first-class workmen for which this country was famous for so many years. The apprenticeship system has been slowly dying over the last 20 years. When I was apprenticed to my trade it was the usual thing for apprentices to serve for three or four years, and there was no pay during that time, but we were taught a trade and we were turned out as workmen. To-day, as a result of the neglect of the apprenticeship system, young people entering industry do not get the care and attention bestowed on them which they used to get in my day, and it would be a thousand pities if we were to bring up a generation of young people with no particular craft occupation at all but merely machine minded, merely left to pick up a trade or calling as best they could. In the long run that would not be to the interests of the nation, and that is a point which I hope the Chancellor will take into consideration. I do not think the concession we ask would cost very much, but the gesture would be of the utmost importance. We are talking of safeguarding young people between 14 and 16, we are talking of sending them to learn something—I do not quite know what—at technical schools if they are unable to get jobs. It would pay the nation a jolly sight better to see that they learned something that was really worth knowing. I hope we shall receive some sympathy from the Chancellor of the Exchequer.

7.55 p.m.

Mr. CHAMBERLAIN: I have no difficulty in giving plenty of sympathy in response to the appeal of the hon. Member for Wednesbury (Mr. Banfield). I agree with him that apprenticeship has been dying out for a number of years, and that that is a great misfortune for the country, but what I have to consider is whether this particular proposal would revive the system of apprenticeship, and I think the hon. Member would admit that he would be stretching his imagination considerably if he ventured to maintain that this proposal would really have any serious effect on the position one way or the other. Of course, this is not a new proposal. The hon. Member for Leigh (Mr. Tinker) mentioned the legislation of 1920, when the allowances were extended to children
over 16 who were undergoing full courses of education in various institutions. But I wonder whether he remembers that on that occasion an Amendment was moved to extend the allowances to apprenticeship. It was moved by the hon. Member for Pontypool (Mr. T. Griffiths) and the then Chancellor of the Exchequer who happened to be my right hon. Friend the Member for West Birmingham (Sir A. Chamberlain) replied to it. He said:
Last year, in deference to a widespread sentiment in the House … I made a concession in the Bill on behalf of the children pursuing their general education. So long as they were pursuing their general education the concession applied. We resolved, in case of doubt as to the efficiency and character of the education, that the question must be decided in consultation with the Board of Education, and the Inland Revenue authorities were given the right to apply to the Board of Education to help them to decide the matter. The whole object was general education. It was not apprenticeship. The latter is entirely apart. I really cannot agree to extend the concession which was made to encourage general education to those who are undergoing apprenticeship."—[OFFICIAL REPORT, 7th July, 1920; col. 1538, Vol. 131.]
Thereupon the hon. Member for Pontypool withdrew his Amendment, an example which I commend to the hon. Member opposite. I fear it will be necessary for me to say a little more than my right hon. Friend did on that occasion if I am to induce the hon. Member to withdraw this Amendment. The concession was made to encourage the education of children, and there is a distinction between education and apprenticeship. The hon. Member for Wavertree (Mr. Cleary), in his very reasonable speech, described apprenticeship as merely another form of education. In a sense, no doubt, that is true, but one's education goes on for a very long time. Some of us, no doubt, are enjoying a form of education in being Members of this House, but we do not on that account get allowances in respect of Income Tax. But, really, the hon. Member will admit that the form of education does not depend upon one's being an apprentice. His argument would apply in the same way to any child who enters industry for the first time and thereupon begins to learn something about how to do the work in that industry, at which he is earning wages. That is really the whole difficulty, or one of the difficulties,
of this Amendment, that you cannot make a distinction between apprentices and others. What is an apprentice? The hon. Member spoke about young persons being articled to solicitors, but he has not defined what he means by an apprentice. An apprentice does not mean a man articled to a solicitor, nor is he going to put that into his Amendment. You have to say what you mean by an apprentice.
The next difficulty is unpaid apprentices. Either he or another hon. Member spoke about premiums being paid by parents for their children to enter the offices of accountants or solicitors or other professional people. In such cases a nominal salary is sometimes paid to the pupil; it is really only part of the premium being paid back. Is such a one a paid or an unpaid pupil? We run into a great number of difficulties of that kind. Take the case, now rather rare, I admit, of a youth who is apprenticed to manual work in a factory and who receives as pay some quite nominal amount. Are we to make a difference between the case in which the youth is getting nothing and the case in which he is getting, say, half-a-crown a week? I do not see any stopping place if we once begin in this way, and we should ultimately come to the position where all children who were either being educated or, if not being educated, were entering industry would form the subject of a claim by their parents, and the moment we get to that point we are destroying the original basis of the concession, which was made for the encouragement of education. I began by saying that I should be very glad to see the system of apprenticeship revived, and if it is not revived we shall have to find something to take its place, but I do not think this Amendment is the way to set about it, and I do not see any way in which this Amendment could be so amended as to become practicable.

8.0 p.m.

Mr. LANSBURY: I should like to ask the right hon. Gentleman to give the Amendment a little more consideration. I do not think he does himself justice when he discriminates between one form of education and another. There are, of course, some people who devote themselves to scientific discovery or to philosophic or historical study, but the bulk of the people who continue their education
in the way of which the right hon. Gentleman spoke just now do so in order to fit themselves for earning their living in one way or another. When the right hon. Gentleman was at the Ministry of Health he must, have received from boards of guardians applications to enable them to pay maintenance grants for the children they apprentice. It must be a very serious burden to a working-class parent, or one who comes within the lower scale of Income Tax, to maintain a boy or girl during a period of unpaid apprenticeship. The right hon. Gentleman said they may pay a premium and get it back in small wages, but he knows perfectly well that that is paid by the parent.

Mr. CHAMBERLAIN: My point was that, if the parent had paid a premium and part of it was returned in the shape of a nominal salary, under the Amendment the pupil might be disqualified.

Mr. LANSBURY: If the parent has put down a, premium first of all and then gets back something weekly, he has already paid. The right hon. Gentleman says that that raises a difficulty because it would then appear that it was not an unpaid apprenticeship. I should have thought that was perfectly easy to decide because the parent has paid the money that is coming back week by week and, therefore, it is still an unpaid apprenticeship. If the parent finds the money for the small weekly allowance, you cannot say that the employers pay it. The parent has paid it. I should have thought if the right hon. Gentleman really wanted to meet us that sort of difficulty could be overcome. May I point out, too, how unfair it is at present to some working-class children as against others? As I understand it, the allowance goes to a boy or girl who is getting advanced education, but that boy or girl may have earned a scholarship grant which will enable the parent to keep him. I have always tried, and am still trying, to get parents to make the sacrifice necessary to enable their children to have some real trade or occupation at their disposal, and one great thing is that in the artisan class a boy or girl should be able to say, "I have served my time and have come out qualified for a job." I would ask the right hon. Gentleman to dismiss all the difficulties and take the Amendment on its merits, and ask his experts to consider how we can best put this into proper
words and bring up a proposal on Report. I know he will say that I do not mind how much it costs. I do not believe it would cost very much money, but I believe the value of it to a poor household, though it might only be £2 or £3 a year, is very considerable when you are dealing with boys and girls of this age.

8.6 p.m.

Sir H. SAMUEL: I think the matter needs further consideration than it has yet received and, before it passes from the Committee, I should like to add a few observations. The Chancellor of the Exchequer said that when it was discussed in 1920 the then Chancellor dismissed it by saying that the concession that had been made was for general education, and this was not general but specialised education, and consequently outside the scope. That is, surely, a, very inadequate answer. Why should it be limited to general education? Take two families in similar circumstances with similar incomes, each with a son. In one case the son is going to become a clerk. The family hope that he will go into a bank, or some other commercial establishment, and when he leaves the elementary school he is sent to a secondary school. That boy is regarded with favour by the State and his father, who has to maintain him during his secondary education, receives an allowance of £50 and is not taxed on that sum. The other family considers that it would be better to put the son into some skilled occupation, perhaps a very highly skilled occupation, making scientific instruments or becoming a dental operative or any work of that sort which requires a long technical training. He is sent to complete his education not to a secondary school but to some employer engaged in the occupation. He receives for some years no salary, but is trained to become a skilled artisan. He is looked upon by the State without favour and his father has to maintain him and has to pay Income Tax on the £50, which presumably is the amount that is regarded as the proper maintenance for the boy. I do not see why there should be that discrimination between the two cases, and I do not see why the right hon. Gentleman should say that the Income Tax allowance should be made in the first case, of general education, but not in the second, of specialised industrial education. When he says it is difficult
to draw the line between paid and unpaid, I do not agree, because obviously where a boy is paid a salary and is already of value to his employer, and is not merely learning his occupation, the household has the benefit of the wage that he receives and consequently there is income coming in to set against the outgoings. But where there is no payment being received there is a case for the consideration of the Treasury and of this Committee.
The right hon. Gentleman, I think, is on firmer ground when he says it is difficult to give a definition of what is an apprentice, and that is why I think the matter requires further consideration. But I cannot believe that the difficulties in the way are insuperable or that it is impossible to provide, with consideration, an adequate definition. The Leader of the Opposition has agreed that possibly the form of the Amendment is not fully satisfactory and that there are cases that ought to be included which would not be included if the Amendment were put in as it stands. I would add my voice to his in asking that the matter should receive further and detailed consideration at the hands of those who are expert in these matters to see whether a definition could not be framed which, on the one hand, would give the concession that is desired by Members representing various points of view, while not being open to the objection to which the right hon. Gentleman has referred. I think the whole country is concerned at the fact that apprenticeship has been dying out, and we see that our position in the world of industry and commerce must depend more upon the skill of our workers, and the enterprise of our manufacturers and merchants in producing goods of high quality in very specialised trades, since we cannot rely upon our being able to compete successfully in the more ordinary occupations which involve unskilled labour, and which lower-paid nations may be able to conduct with greater economy than we can. For these reasons, I trust that the matter may receive the further consideration which I suggest.

8.11 p.m.

Mr. CHAMBERLAIN: The right hon. Gentleman has succeeded in showing how the present law is full of inconsistencies. There is no difficulty in doing that. The
whole of our taxation is full of inconsistencies and illogicalities which have arisen from the fact that Members have moved Amendments and Chancellors of the Exchequer from time to time have accepted them. If I were to accept this, it would not put an end to anomalies and inconsistencies. It would give rise to a whole fresh series of them. I have pointed out some practical difficulties. I have not said anything about cost at all. I have not attempted to suggest the difficulty of the cost. The right hon. Gentleman has not shown how to overcome the difficulties that I have pointed out. The Leader of the Opposition has made an appeal to me. He has asked me to reconsider this and bring up a proposal on the Report stage. I am not going to undertake to do that. I do not myself see how we could make an Amendment of this kind properly workable. It may be that my enthusiasm, not being as great as that of the right hon. Gentleman, has not done justice to the subject. I am not going to offer to produce an Amendment which will carry out what he wants because I do not know how to do it.

Mr. LANSBURY: Your men under the Gallery can help you.

Mr. CHAMBERLAIN: They cannot perform impossibilities. I have pointed out what the difficulties are. I suggest to the right hon. Gentleman that he and his friends should have another go to see whether they can think of some better form of Amendment and, if they will bring us a new Amendment on Report, I will certainly consider it with as nearly an open mind as any one can do in my situation, because I recognise that there is a good deal to be said for the idea behind it. But the difficulties that I have mentioned would have to be overcome before I could consider it.

8.14 p.m.

Mr. LANSBURY: It is very easy to throw out a challenge to me and my friends to "have another go," but we have not the staff of experienced people. The Government have people who are adepts at getting over difficulties if the Government want them to get over difficulties. Will the right hon. Gentleman allow one of my friends to interview the gentlemen at the Treasury that he himself would consult if he wanted an Amendment of this kind dealt with in a
satisfactory manner? I would rather he did it himself, but if he will not, and if he puts it on to me, perhaps he would let us have the assistance which he himself would have at his disposal if he wished to deal with this matter in the manner in which we want to deal with it, so that we may have the advantage of that skill, wisdom and advice. If the thing cannot be done, we will admit that that is so, but we want to have a try—not "another go"—with the very best advice advisable.

Mr. CHAMBERLAIN: I made my offer in good faith, and I am perfectly ready to arrange that the experts at the Treasury shall put at the disposal of the right hon. Gentleman their ideas on the subject in order to see whether they will be able to help him.

Mr. LANSBURY: Thank you very much.

Mr. TINKER: In view of the understanding which has been come to, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clauses 21 to 23 ordered to stand part of the Bill.

CLAUSE 24.—(Deduction from profits of contributions paid to rationalise industry.)

8.17 p.m.

Mr. MORGAN JONES: I beg to move, in page 17, line 9, at the end, to insert:
(c) that effective measures have been taken to ensure the re-employment of, or payment of adequate compensation to, any workpeople who may be displaced; and.
The principle involved in the Amendment is one to which my hon. Friends and myself attach no little importance. One of our great preoccupations in modern industry is the development of what we call rationalisation. Whatever our views upon the general principle may be, it is very largely in the hands of those who privately own industry to determine for themselves what arrangements they will arrive at in order to effect economies in the industries that they control. Two elements have already appeared in rationalisation; first, a substantial amount of unemployment invariably accompanies it, and secondly,
where a firm is removed by buying out, or some like operation of a voluntary character, there is generally an element in the bargain consisting of some form of compensation to the directors and others on the managerial side of the industry. Outstanding examples of that have been brought to our attention in the course of the last few years.
As I understand the import of the Clause, and especially of Sub-section (2), it is that Sub-section (1) would encourage rationalisation, but before those who are responsible for it are entitled to participate in the Income Tax benefits, they are subject to the qualifications in Subsection (2). Whatever may be the merits of paragraphs (a) and (b) of that Subsection, there ought to be another Subsection on the lines that we suggest. If the object of Sub-section (1) be to encourage rationalisation, I am entitled to argue that rationalisation which takes place in so far as it qualifies for certain financial advantages by way of remission of Income Tax is rationalisation at the public expense. Public money, if you will, to a limited degree, is to be used in order to encourage re-arrangements of industry, which might be in the public interest but will have the effect of displacing workpeople.
Two principles emerge, the first of which is, are we entitled to use public money, even to a limited extent by remission of Income Tax, for private purposes on the mere ipse dixit of a few people controlling an industry, in spite of the fact that the known consequences will be the displacement of a large number of workmen? That is the first big proposition which we are raising. It is not unlike the proposition which already prevails in certain industries. My coal-mining friends know that, in connection with certain wage ascertainments in South Wales and elsewhere, certain expenditure incurred by colliery companies goes into their aggregate expenditure and the companies are entitled to consider that as part of their normal expenditure, even though it is often used in a way that is inimical to the interests of the workers. There is no control over them. We are called upon to approve a system such as this.
Let me put it arithmetically—I am only taking a hypothetical figure. Suppose that company A determines to take over company B and amalgamate it with itself.
As a result of the amalgamation, a given sum of money is expended by way of compensation to directors and others attached to the organisation of company B, and I suppose I shall be right in saying that, if it costs £250,000 to take over company B, that £250,000, and any money spent in compensation to directors and so on, would be regarded as part of the ordinary current expenses of company A, because, of course, it is part and parcel of the scheme of rationalisation. I repeat that the scheme of rationalisation may very easily lead, and almost invariably does lead, to the displacement of large numbers of workpeople, and I have very grave doubts, and I believe my hon. Friends have very grave doubts, as to the propriety of allowing expenditure of that sort to be considered for the purposes of Income Tax remission.
If, however, it is to be allowable to make provision for displaced directors or officials, we argue that, just as there may be a case for compensating displaced directors, so there ought to be, as one of the conditions of approving of the amalgamation, a provision on the lines suggested in our Amendment. I do not want to be understood as in any way approving of the principle of using public money, even to a limited extent, for the purpose of helping the rationalisation of private concerns which are absolutely outside public control; but, if that principle be approved, and if compensation for directors and others be allowed by taking it into consideration as an appropriate expenditure in connection with such a scheme of rationalisation, I submit that, before such a scheme is approved, it should be laid down as a cardinal principle that it should satisfy a provision snch as that which I now move.

8.28 p.m.

Mr. TINKER: I support the Amendment which my hon. Friend has moved. Clause 24, for the first time to our knowledge, gives compensation to the employing classes affected by schemes of rationalisation, by making certain concessions from public funds in the form of relaxation of taxation. That recognises the principle that, when there is redundancy and when the Board of Trade are satisfied that it is necessary, compensation should be paid, and I think that equal consideration ought to be given to
all those who may be affected. The closing down of works means that a number of workpeople are thrown out of employment, but Clause 24 pays no regard to them. We have had to recognise that, under the present system of private enterprise, nothing has been done hitherto in that direction, but now we find the Government of the day saying, "There has to be redundancy for the benefit of trade, and we are going to help you." Surely it is not beyond the power of the Government and Parliament, having admitted that principle, to say that some recognition shall be given also to the workmen's side. In certain cases employers do this for a favoured few. For instance, when amalgamations have taken place in the coal-mining industry in Lancashire, a number of people have got pensions. But the case of the ordinary workman is not recognised at all. It is merely said that work cannot be found for him, and he must look after himself.
We consider that the employers should be told that they must have some scheme under which these men may get something by way of pension, and that the State should recognise that by remitting taxation, just as it is remitted when payments are made to other redundant classes. If that were done, I should readily accept it, because, although I do not agree with the present system, I want to get as much as I can out of it for my people. I know that it will ultimately collapse, and perhaps in the end it would be better to allow it to do so, but we have to recognise that these men are suffering, and we have to try to mitigate their suffering as much as we can, believing that in time we shall be able to educate them to see that the whole system is wrong. Therefore, I contend that it should be made necessary for the employers to provide something for their workpeople who may be displaced in this way.

8.32 p.m.

Mr. MAITLAND: If the speeches of the two hon. Members represented all that was to be said on behalf of this proposal, they would find general support in all quarters of the Committee, but they have stressed a point which I am sure will not quite bear investigation. They have suggested that in this Clause the Government are introducing a new principle into our system of taxation but I submit with
great deference that that is not the case. Already in this country, following the rules of taxation, there are in operation arrangements whereby those who are responsible for the conduct of industry can claim certain exemptions from taxation. Those exemptions have been founded on experience, and have been found not only to be useful to the managerial side of industry, but to have an influence upon its employing capacity. For example, in ordinary Income Tax practice permission is given to inspectors of taxes to exempt donations to hospitals where it can be proved that the workpeople of the employer making such donations are receiving benefits from the hospital. Surely, the hon. Members would not say that that is wrong. In the case of firms undertaking capital expenditure for machinery which in course of time will fall to be renewed, there again there is in operation a system of granting depreciation. The depreciation is allowed as an exemption from Income Tax. No one would say that that was a bad system. The hon. Members' assumption is that the Government are always giving money to employers and withholding it from the workers, but that is not the case.
The case is visualised in this Clause of industries that have got to such a pitch, by continued losses and other reasons, that they are not able to conduct their business in existing circumstances in the best interests of all concerned, shareholders, management and workpeople. The Clause provides for relief from taxation of contributions made to advance a scheme of amalgamation, but before relief is so given the scheme must, according to the terms of paragraph (b), be certified by the Board of Trade as in the national interests and the industry as a whole. It is really an extension of a principle which has been in operation for years in our Income Tax practice. I would point out to hon. Gentlemen above the Gangway that in these days it is not a question of giving public money to some of these industries; but the fact is that, because of losses incurred over many years, these people are not now contributing anything to the Treasury at all. If this Clause is put into effect, you will, as a result of the action which the Government now propose, have industries which may at some time have been unprofitable so reorganised as once more to
become part of the community contributing taxes to the Treasury. Hon. Gentlemen surely do not object to that. If they do, the whole basis of our present system must fall. [HON. MEMBERS: "Hear, hear!"] Hon. Members have made their real meaning clear. It is not so much this proposal to which they object as the whole system under which we live. Their attitude may be very ingenious, but it does not detract from what the Clause purports to do, namely, to enable the Treasury, through the medium of the Income Tax authorities, to grant concessions in the interests of rationalisation when schemes are submitted and proved to be in the national interest.
I should have thought that it would be in the national interest to see that any schemes proposed helped the employing capacity. Why should hon. Members assume that no one but themselves are interested in employment? It is the function of any system to try and employ the people in the best possible way. If it is found that by a scheme of rationalisation more people can be employed profitably, then from their point of view and from the capitalist point of view there is nothing of which to be ashamed in the proposals submitted in this Clause. Hon. Gentlemen above the Gangway are doing a dis-service if they are looking at it from the point of view of a bad employer. It is no use having a large industry carried on at continuous losses because the time must come when the units will fall down completely, and it will be no solace to hon. Gentlemen to go to their constituencies and say: "The capitalist system has broken down; you have no wages at all." This Clause, in my judgment, is not the introduction of a new principle, but the extension of a principle which, in the light of experience, has been found to be beneficial to those engaged in industry, employers and employed alike. I have pleasure in supporting the Government in these proposals, and I suggest that the Amendment would be a negative thing, not because no one has sympathy with it, but because it is generally covered in the terms of the Clause itself.

8.39 p.m.

Mr. ANEURIN BEVAN: I am sure that if the hon. Member for Faversham (Mr. Maitland) reads the speech to-morrow morning which he has
delivered this evening he will be as much surprised as we are by what he has said. He suggests that the purposes of the Amendment are nothing at all. I understand that the purpose of the Amendment is to secure compensation for displaced workpeople. Is it suggested that such a provision is contained in the Clause? As we understand the Clause, it is to enable a company or business concern which is part of a scheme of general reorganisation of industry or the major portion of an industry to secure that the sum of money that is spent by that concern in connection with that scheme shall be exempt from taxation. That principle is inequitable from the point of view of the displaced work-people and of property owners in general. Is it fair that one class of property owner should have to pay a higher Income Tax in order to make the property of another property owner more valuable? Mark you, this House is not to judge this matter. The scheme is not to come before the House in the form of a Bill, like the London Passenger Transport and Electricity Bills, but is to be dealt with by a certificate of the Board of Trade, and the only safeguards are those contained in the Clause.
It is a most inequitable proposition. If I were a property owner I should protest against it. I should have to try and win my profits in competition in the market. If I failed to conduct my business profitably I should lose my profit, but if I happened to be in another industry and was wise enough to invest money in it, and if a large number of people had invested more in the industry than the market could bear, we could all get together and arrange a scheme. We could come to the Board of Trade and obtain a certificate for it and call upon the general taxpayers of the country to make a contribution towards repairing the value of our own property. That seems to be a monstrous proposition. Something might be said for schemes of reorganisation having the approval of the House of Commons, but schemes of this sort can be carried out without checks and safeguards of any representative assembly. They merely have to satisfy the three considerations contained in this Clause to secure a certificate from the Board of Trade. I do not believe that the system of private
enterprise will survive a system of this sort for long. In so far as there has been any tradition of honest dealing and incorruptibility in the Civil Service, it is gravely assailed by principles of this kind. It is not sound, statesmanlike legislation to put such formidable powers into the hands of the President of the Board of Trade unchecked, with no other consideration than the wide generalisations contained in this Clause.
I was astounded to hear the hon. Gentleman the Member for Faversham suggest that the principle contained in the Clause was merely an extention of the existing practice. He used a number of illustrations. He said that at the moment employers are entitled to charge as expenses contributions to hospitals and also that a higher proportion of the amount put to reserve is exempted from taxation than was the case previously.

Mr. MAITLAND: I did not say anything of the kind. I did not mention reserves.

Mr. BEVAN: The hon. Member used the term "depreciation." I remember that two or three years ago there was a proposal in this House to allow an additional 10 per cent. to be placed to reserve and to escape taxation, because it was felt that concerns were not accumulating sufficiently substantial reserves and were being driven unnecessarily on to the open money market.

Mr. MAITLAND: If the hon. Member wants to know what I said, it was this, that depreciation was charged in respect of machinery which, in the course of time, would fall for renewal. I asked his hon. Friends whether because that charge of depreciation was allowed to be exempted from Income Tax they would regard that as an unsound method, and I gathered that they did not regard it as unsound.

Mr. BEVAN: I think the hon. Member and myself are at cross purposes. The statement that I am making is that a few years ago in order to encourage companies to put aside larger sums of money to reserve a larger percentage was allowed to escape taxation. If I am challenged, I am prepared to produce the OFFICIAL REPORT in order to prove my statement. The reason advanced was that companies were distributing in the form of dividends moneys that they
should have set aside for reserve and depreciation, which was a very bad thing because they were being driven unnecessarily into the open money market when funds were required to renew their plant. The hon. Member suggested in his speech that the proposal in this Clause was merely an amplification or extension of the same principle. Let me give an illustration. Suppose a colliery company or a steel company put a large sum of money to reserve, higher than the amount allowed, and when the Inland Revenue sought to tax it the company pleaded that they intended to use the money in order to buy new plant. Would the hon. Member suggest that that money should be exempt from taxation? If they proposed to add to their property by purchasing additional capital out of revenue, would it be suggested that they should escape taxation? Of course not. But if they are going to use money to buy out a competitor and add to the value of their property in that way, it is suggested that they should escape taxation. If I were a business man I should not care much whether I used my revenue to purchase additional plant or to buy out a competitor. Both ways would increase the value of my property. I should like to hear from the Financial Secretary to the Treasury how he could justify exemption in the one case and not in the other. In both cases I should be adding to the value of my property.
Towards the end of his speech the hon. Member admitted that the purpose of the Clause was to bring into profitability concerns not now making profits. In other words, the community as a whole are going to subscribe to a tax rebate to put profits into the pockets of people not now making profits. I should like to hear a Conservative defend and justify that principle before any meeting of business men and suggest for a moment that they out of their profits should make contributions in order to restore profitability to some other concern. Let me give a case in point. The steel industry of Great Britain are about to consider a scheme of steel re-organisation. If the scheme had to come before this House we should have a chance of inserting in the necessary Bill the same sort of Clauses that exist in the Electricity Acts and the London Transport Act, where compensation has to be given. The proposal now is to put this Clause in the
Finance Bill and try to ride past the House of Commons, so that we shall not be able to secure those Clauses.
I represent a constituency which has one of the oldest steel works in Great Britain. There were employed there between 4,000 to 5,000 people. That steel works has been idle since October, 1929. It was, I believe, the home of the Bessemer process in this country. That area has contributed more wealth per square inch probably than any other area in the British Empire. The workpeople have been idle all the time since the works closed, and there is no prospects as far as I can see of them ever getting into employment there again. There has just been signed a new steel cartel, an arrangement with the steel producers on the Continent to share the markets and a certain quota has been allotted to the British steel producers.
The difficulty in every scheme of that sort is that if you have a productive capacity of, say, 40,000,000 tons per annum, and the amount allowed to you is only 10,000,000 tons per annum, you have to devise some way of sharing that 10,000,000 market among the potential producers of the 40,000,000. That has been the difficulty in regard to steel and coal for many years. How do they propose to do it? There is only one way in which they can do it, and that is by eliminating in the steel industry the redundant steel producers. If you were going to organise a steel producing corporation for Great Britain, which is what ought to be done, you would have to come to this House and get the necessary powers, and we could then insert in the Bill the necessary protection. But a Director-General of steel has been appointed and he is engaged with his colleagues in the industry in producing a scheme of rationalisation.
What may happen? It may not happen, but I have grave fears. The Ebbw Vale Steel Company will obviously be able to exploit the nuisance value of their productive capacity and get a redundancy payment. The rest of the steel producers of Great Britain, having to admit that Ebbw Vale is in the market, must buy her out, and the Ebbw Vale Company's shareholders and the biggest of them is the bank, will be able to secure a portion of the money which they look like losing in the Ebbw Vale steel works at the moment. Redundancy payment will be made by the rest of the producers,
Guest, Keen and Baldwin, Dorman Longs and Company, and Brown's. Ebbw Vale will get their cash payment in order to go out of the market permanently, and Guest, Keen and Baldwin's and Dorman Long's will be able to get their exemption from taxation in respect of the money that they have paid to the Ebbw Vale Company, while the person in the whole concern who will get nothing at all will be the Ebbw Vale steel worker who will be left high and dry. That is an unconscionable proposal. There are men and women who have grown up in Ebbw Vale, Dowlais and Blaenavon who, with their fathers before them, have established the foundations of all the fortunes of Great Britain. I said all the fortunes, because steel is the basis of all fortune.

The TEMPORARY CHAIRMAN: The hon. Member is now getting very wide of the terms of the Amendment.

Mr. BEVAN: I was illustrating what the Clause means and what the Amendment means. Our Amendment suggests that if the Ebbw Vale Company is going to have compensation, and if those other companies who buy out the Ebbw Vale Company are going to get compensation, the idle steel workers should come into the picture somewhere. The same thing applies to coal and to cotton, where you have a redundant capacity. In each of these industries schemes are in course of preparation. It was understood that the schemes would have to come before this House for approval. The proposal in the Finance Bill short-circuits the House of Commons. It is on a line with all the other legislation which the present Government have carried. Every imaginable proposal has been devised to try and get things hidden away in Government Departments. It is government by sleight of hand. The Government have not the courage to put these proposals in a Bill which has to come before this House, where they can be criticised, they try to do this in a furtive, clandestine and hole-in-the-corner manner in order that we may not be able to represent the legitimate claims of the workpeople. How any hon. Member can justify the contention that the obsolescent property is entitled to compensation, and the obsolescence of labour is not, defies comprehension.
There is this difference between property and labour, apart from the sentimental and ethical difference which I will not mention because I should be accused of talking sob-stuff, and it is not good parliamentary form to consider the humanities. But you have men in Ebbw Vale who are still skilled steel workers, as there are in the coal industry, men of between 40 and 50 years of age, specialised craftsmen, specialised not only in their technical skill but in the districts in which they live. Unfortunately the basic industries which are to be subject to these schemes are all of them in special parts of Great Britain where alternative employment is not easily obtainable. You have specialised in regions as well as in the human individuals. These schemes mean that you are sentencing these districts and these men to industrial death. They cannot find any way of escape from their situation. The same thing applies also to shipbuilding. I submit to the Committee in all sincerity that if society which, for its own purposes and for efficiency, has specialised these men in their particular place of living now declares that they are no longer required, and does this by a certificate of the President of the Board of Trade, and proposes to compensate everybody else, then, surely, there is every justification for compensating the workpeople. The Government are not doing justice to themselves in attempting to insert in a Finance Bill proposals of a far-reaching character and in handing to the President of the Board of Trade power to give certificates having great financial value attaching to them. We have had quite enough of this sort of legislation, and it will be extremely difficult for the Government to justify themselves not only to us but to many of their own supporters in the country.

9 p.m.

The FINANCIAL SECRETARY to the TREASURY (Mr. Duff Cooper): The Amendment has been moved in a reasonable way by the hon. Member for Caerphilly (Mr. Morgan Jones), and supported in a reasonable way by the hon. Member for Leigh (Mr. Tinker). It was answered by the hon. Member for Faversham (Mr. Maitland) with every word of whose speech I entirely agree. The case against the Amendment is overwhelming. The speech of the hon. Member for Ebbw Vale
(Mr. Bevan) was an attack on the whole Clause, although he was wise enough to return at the end of every paragraph to the Amendment. We must pursue this discussion upon the basis that the best must be made of capitalism. That was the difficulty in which the hon. Member for Caerphilly found himself, for he found it necessary to assure us that though they might prefer that the whole system should be wiped away yet as long as it was there it was their business to make the best of it. That is the object of the Clause, and, indeed, of all the efforts of the present Government. The hon. Member for Ebbw Vale betrayed his profound socialist convictions by regarding all those who are engaged in industry as the owners of private property for whom the State should do nothing. When the State does anything to assist industry it must necessarily assist the people who are running the industry, and the hon. Member looks upon it as a private present from the Government to the managers of industry.
That is where we differ in our political philosophy. We look upon it as an attempt to help the industry as a whole, the workpeople in the industry, and, thereby the whole of the country. Profound as are his socialist convictions, the hon. Member for Ebbw Vale does not yet seem to hold them with that clearness of view with which he usually expresses himself, because he made the extraordinary statement that by handing to the Board of Trade, a great Government Department, the power to decide whether a particular scheme is in the national interests or not, we were risking the corruption of the whole Civil Service. Really, what becomes of Socialism if no power is to be given to a Government Department! Surely, the whole basis of Socialism is to hand over everything to Government Departments and the heads of Government Departments, who, I suppose, will still be politicians. The hon. Member has such a profound fear of democracy that he cannot trust a Government Department to decide in a small matter such as this whether the thing is in the national interest or not. If he will not trust one Government Department as far as that, I am indeed surprised that he is prepared to hand over the whole administration of the country, our private lives and our private fortunes as well, to a bureaucracy, which is the socialist ideal.
That, I think, was the mistake that the hon. Member for Caerphilly made when he said that the benefit of this proposal would go to the few people controlling the company. That is very far from being the case. These people have to persuade the Board of Trade on a great many points, and above all they have to persuade the Board of Trade that the scheme is in the national interest and in the interest of the industry as a whole. That is the fundamental point. Any scheme that is in the interest of the industry as a whole must be in the interest of the workpeople engaged in that industry. It is all very well to say that it may for the moment throw out of work certain people in certain districts. I suppose that every improvement that has ever been effected in industry has for a short time thrown out of work certain people in certain grades. We remember how, less than 200 years ago, when machinery was first introduced, there were riots and people went about breaking up the machinery. It seemed obvious to them that many people would never be employed again. What has been the result? As a result of that machinery being introduced not only have as many people been employed, but their number has been multiplied by tens and hundreds in those industries, and they have enjoyed wages and conditions undreamt of by their ancestors.
The right hon. Member for Darwen (Sir H. Samuel) said on the last Amendment that everything now depended upon our keeping our industry as efficient and up to date as it could possibly be kept. That can only be done by encouraging every step taken in that direction. We know that the heads of industry are not too eager to enter into schemes of rationalisation, to embrace every suggestion for amalgamation that is put forward. They are not looking about any too eagerly for any such schemes. They need encouragement. We are not spending large sums of public money and giving it to a few people engaged in certain industries in order that they shall make more money themselves. We are merely allowing a certain remission of taxation in cases where it has been proved to the satisfaction of the highest authority which the hon. Member can suggest—

Mr. A. BEVAN: No.

Mr. COOPER: The hon. Member cannot suggest a higher authority than the Board of Trade.

Mr. BEVAN: This House.

Mr. COOPER: The highest permanent statutory authority, the Board of Trade. Those who can prove that what they are doing is in the interest of the industry as a whole will be entitled to this remission of taxation. The Amendment asks for compensation for workers who are displaced. On the face of it that is not an unreasonable proposition. As the hon. and learned Member for East Bristol (Sir S. Cripps) said in a previous debate, such a provision has been introduced in certain Acts in the past. But those were definite Acts which were brought before the House. For instance, there was the Electricity Supply Act of 1919. There were the Railway Act and the Local Government Act. A large proportion of the workers on the railway and local government services have since 1920 been excluded from the unemployment insurance scheme under a certificate of exemption granted by the Ministry of Labour. This Clause is in a different category. Here we are not dealing with a definite proposal.

Sir S. CRIPPS: The Financial Secretary would not argue that provisions had been made for the compensation of workers who had been lowered in their grade. That has nothing to do with being turned out of employment. This Clause has no relationship to the unemployment provisions.

Mr. COOPER: In the case of those Acts you knew exactly the people with whom you were dealing. Here you have an amalgamation got together. Those engaged in an industry have faced failure but are making a great effort to pull themselves together. Men are going out of employment perhaps every day. The amalgamation is made and the industry is improved. But a great many people lose employment. How are you going to say whose loss of employment was due to an amalgamation which took place in that way at that time? The difficulties would be very great. Then there is the vagueness of the Amendment. What is "adequate compensation"? The hon. Member for Leigh (Mr. Tinker) recognised that point. The moment the line was drawn as to who would benefit and who would
suffer from the new amalgamation we should have the same complaint made, that the benefit went to the favoured few. The older people would demand a pension. What adequate compensation could you give to the young man who, perhaps, had been employed for only two or three months? How much worse off would he be than those engaged in similar work who had been out of employment perhaps for years? Why should he be entitled to special consideration over and above his fellow workers? My view, supposing that the opinion of the Board of Trade was right and that it proved in the interest of the industry as a whole, that that man's prospects of obtaining work later on would be improved; he would very likely obtain better work at a better wage. Those are some of the practical difficulties in the way of the Amendment, and I do not think the Government can be expected to accept it.

9.14 p.m.

Sir S. CRIPPS: I really am extremely surprised at the arguments of the Financial Secretary. I am not surprised at the Government not accepting the Amendment, because they have never yet accepted any Amendment from this side of the House to protect the workers in any scheme they have ever brought forward. This refusal is on a par with their other refusals in the marketing schemes and similar schemes. The Financial Secretary's argument, I understand, starts on this basis: That any scheme that is in the interest of an industry as a whole must be in the interest of the workers. Therefore, he says, why compensate the workers? I say, why compensate the shareholders? Any scheme must be in the interest of the industry as a whole and therefore of the shareholders as a whole. Why, then, compensate them? Why make payments for redundant plant to people who happen to be shareholders in respect of the redundant plant. On this argument, all the shareholders are going to be benefited. But the shareholders are individuals just as the workers are individuals and it does not help one individual to say that, although he is going to lose his money or is going to be put out of his employment, somebody else is going to get twice as much money or somebody else is going to be assured of good employment. The argument that the scheme is good for everybody and
that therefore each individual, as an individual, must be satisfied with it, will not meet the case of anybody who as an individual, loses where other people are said to gain.
It is a recognised fact under our system to-day that where individuals suffer for the benefit of a larger class or of the community, whichever it may be, the larger class or the community shall make up to that individual whatever loss he is suffering, although the class of which he is a member may benefit as a whole. That is the general principle which has been acknowledged in this country for centuries as regards compensation for the taking over of property or shares or anything else. When it is for the benefit of the country as a whole that property should be taken and used for some particular purpose, compensation is paid, because one distinguishes between the individual who loses that property and the general community who benefit by its particular use. Every argument that can be applied to the necessity for the payment of compensation in those circumstances applies with equal logic and force to the necessity for the compensation of an individual who is deprived of his employment. There can be no distinction in argument between the one case and the other.
That is why, in all major Acts that have been passed since the War dealing with amalgamations of businesses or services, provisions have been inserted by the House of Commons that compensation shall be paid to all individuals who are displaced or graded down as a result of such amalgamation. The Railways Act of 1921 laid down a code for dealing with all these matters and that code gets rid of all the imaginary difficulties mentioned by the hon. Gentleman. There is a proper arbitration tribunal and a proper scheme for dealing with these questions but, of course, one does not include all those provisions in a short Amendment of this character. But the arrangements are all there in that Act and they have been operated and hundreds of arbitrations have been held and decided under the Fifth Schedule—as I think it is—of the Railways Act, 1921. Ever since that Act, it has been recognised that where the community desires to amalgamate businesses and where that amalgamation necessarily results in the displacement of
certain workers and the reclassification of other workers, the community takes the responsibility of seeing that those workers are compensated for their loss, whether of employment or of status.
All we are asking here is that the Board of Trade shall not certify a scheme unless provision is made in that scheme for such compensation or for the re-employment of the workers somewhere else. If a scheme is going to lead to an expansion of employment the workers can be re-employed somewhere else. If not and if certain workers are going to be left high and dry, without employment, then they are entitled to compensation for their individual loss, just as shareholders are entitled to such compensation. I do not think the hon. Gentleman has put forward a single valid argument against that proposition. I am not going into the more general question but I ask the Committee to recognise that this is a case in which we are parting with this matter finally on this Clause. It is not a case in which the House of Commons can subsequently interfere when a scheme is put forward to the Board of Trade because the certificate will be granted before any communication is made to the House. Indeed the House will not know of such a scheme unless the information is given in answer to a question, and then it can only be criticised as a matter of administration upon a Supply day. There is no power to control the Board of Trade.
I ask the Committee to consider this matter seriously because it is of vital importance. If serious schemes are likely to be brought forward on these lines, and one imagines that to be the object of this Clause, it is going to be a very grave matter for the employés concerned, unless this Committee is now going to say that, as a condition of this remission of taxation, we insist that the workers shall be cared for. Just as we have insisted in the past when amalgamations of industries have been brought before the House of Commons, so we should insist now on the Board of Trade seeing to it that provisions for the workers are included in any schemes of this kind.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 39; Noes, 220.

Division No. 241.]
AYES.
[9.22 p.m.


Adams, D. M. (Poplar, South)
Grenfell, David Rees (Glamorgan)
Paling, Wilfred


Attlee, Rt. Hon. Clement R.
Grundy, Thomas W.
Rathbone, Eleanor


Banfield, John William
Hall, George H. (Merthyr Tydvil)
Salter, Dr. Alfred


Bevan, Aneurin (Ebbw Vale)
Jones, Morgan (Caerphilly)
Smith, Tom (Normanton)


Cleary, J. J.
Kirkwood, David
Strauss, G. R. (Lambeth, North)


Cove, William G.
Lansbury, Rt. Hon. George
Thorne, William James


Cripps, Sir Stafford
Leonard, William
Tinker, John Joseph


Daggar, George
Logan, David Gilbert
West, F. R.


Davies, David L. (Pontypridd)
Lunn, William
Williams, Edward John (Ogmore)


Dobbie, William
Macdonald, Gordon (Ince)
Williams, Thomas (York, Don Valley)


Edwards, Sir Charles
McEntee, Valentine L.
Wilmot, John


Gardner, Benjamin Walter
Maclean, Neil (Glasgow, Govan)



Graham, D. M. (Lanark, Hamilton)
Mainwaring, William Henry
TELLERS FOR THE AYES.—


Greenwood, Rt. Hon. Arthur
Milner, Major James
Mr. John and Mr. Groves.




NOES.


Agnew, Lieut.-Com. P. G.
Gluckstein, Louis Halle
Molson, A. Hugh Eisdale


Aske, Sir Robert William
Graves, Marjorle
Moore, Lt.-Col. Thomas C. R. (Ayr)


Assheton, Ralph
Griffith, F. Kingsley (Middlesbro', W.)
Moreing, Adrian C.


Balley, Eric Alfred George
Grigg, Sir Edward
Morris, John Patrick (Salford, N.)


Baldwin, Rt. Hon. Stanley
Grimston, R. V.
Morris-Jones, Dr. J. H. (Denbigh)


Balfour, Capt. Harold (I. of Thanet)
Gunston, Captain D. W.
Morrison, G. A. (Scottish Univer'ties)


Beaumont, Hn. R. E. B. (Portsm'th, C.)
Guy, J. C. Morrison
Nation, Brigadier-General J. J. H.


Bennett, Capt. Sir Ernest Nathaniel
Hacking, Rt. Hon. Douglas H.
Nunn, William


Bernays, Robert
Hannon, Patrick Joseph Henry
Pearson, William G.


Blindell, James
Harbord, Arthur
Penny, Sir George


Bossom, A. C.
Harvey, George (Lambeth, Kenningt'n)
Percy, Lord Eustace


Boulton, W. W.
Haslam, Henry (Horncastle)
Perkins, Walter R. D.


Bowyer, Capt. Sir George E. W.
Haslam, Sir John (Bolton)
Petherick, M.


Braithwaite, J. G. (Hillsborough)
Headlam, Lieut.-Col. Sir Cuthbert
Pickering, Ernest H.


Brass, Captain Sir William
Hellgers, Captain F. F. A.
Pickthorn, K. W. M.


Broadbent, Colonel John
Heneage, Lieut.-Colonel Arthur P.
Pownall, Sir Assheton


Brocklebank, C. E. R.
Herbert, Capt. S. (Abbey Division)
Procter, Major Henry Adam


Brown, Col. D. C. (N'th'l'd., Hexham)
Hills, Major Rt. Hon. John Waller
Pybus, Sir John


Brown, Brig.-Gen. H. C. (Berks., Newb'y)
Holdsworth, Herbert
Raikes, Henry V. A. M.


Browne, Captain A. C.
Hope, Capt. Hon. A. O. J. (Aston)
Ramsay, T. B. W. (Western Isles)


Burghley, Lord
Hornby, Frank
Ramsbotham, Herwald


Burgin, Dr. Edward Leslie
Horsbrugh, Florence
Ramsden, Sir Eugene


Burnett, John George
Howard, Tom Forrest
Reed, Arthur C. (Exeter)


Butt, Sir Alfred
Hudson, Capt. A. U. M. (Hackney, N.)
Reid, David D. (County Down)


Caporn, Arthur Cecil
Hume, Sir George Hopwood
Reid, William Allan (Derby)


Carver, Major William H.
Hunter-Weston, Lt.-Gen. Sir Aylmer
Remer, John R.


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Inskip, Rt. Hon. Sir Thomas W. H.
Roberts, Aled (Wrexham)


Chamberlain, Rt. Hon. N. (Edgbaston)
Jackson, Sir Henry (Wandsworth, C.)
Roberts, Sir Samuel (Ecclesall)


Chapman, Col. R.(Houghton-le-Spring)
James, Wing-Com. A. W. H.
Robinson, John Roland


Clayton, Sir Christopher
Jamieson, Rt. Hon. Douglas
Rosbotham, Sir Thomas


Cobb, Sir Cyril
Jones, Henry Haydn (Merioneth)
Ross, Ronald D.


Cochrane, Commander Hon. A. D.
Jones, Lewis (Swansea, West)
Ross Taylor, Walter (Woodbridge)


Conant, R. J. E.
Kimball, Lawrence
Ruggles-Brise, Colonel Sir Edward


Cooper, A. Duff
Kirkpatrick, William M.
Runge, Norah Cecil


Cooper, T. M. (Edinburgh, W.)
Lamb, Sir Joseph Quinton
Russell, Albert (Kirkcaldy)


Courthope, Colonel Sir George L.
Law Sir Alfred
Russell, Alexander West (Tynemouth)


Craddock, Sir Reginald Henry
Law, Richard K. (Hull, S. W.)
Russell, Hamer Field (Sheffield, B'tside)


Craven-Ellis, William
Leech, Dr. J. W.
Rutherford, John (Edmonton)


Crookshank, Col. C. de Windt (Bootle)
Lees-Jones, John
Rutherford, Sir John Hugo (Liverp'l)


Crookshank, Capt. H. C. (Gainsb'ro)
Leighton, Major B. E. P.
Salmon, Sir Isidore


Cross, R. H.
Lennox-Boyd, A. T.
Salt, Edward W.


Crossley, A. C.
Levy, Thomas
Samuel, Rt. Hon. Sir H. (Darwen)


Cruddas, Lieut.-Colonel Bernard
Lewis, Oswald
Samuel, M. R. A. (W'ds'wth, Putney)


Culverwell, Cyril Tom
Lindsay, Noel Ker
Selley, Harry R.


Dalkeith, Earl of
Little, Graham-, Sir Ernest
Shaw, Captain William T. (Forfar)


Davies, Maj. Geo. F. (Somerset. Yeovil)
Llewellin, Major John J.
Shepperson, Sir Ernest W.


Denman, Hon. R. D.
Lockwood, John C. (Hackney, C.)
Simmonds, Oliver Edwin


Dower, Captain A. V. G.
Loftus, Pierce C.
Simon, Rt. Hon. Sir John


Drewe, Cedric
Lovat-Fraser, James Alexander
Sinclair, Col. T. (Queen's Unv., Belfast)


Eady, George H.
Lumley, Captain Lawrence R.
Smiles, Lieut.-Col. Sir Walter D.


Eales, John Frederick
Mabane, William
Smith, Bracewell (Dulwich)


Ellis, Sir R. Geoffrey
McCorquodale, M. S.
Smith, Sir J. Walker- (Barrow-in-F.)


Elmley, Viscount
MacDonald, Rt. Hon. M. (Bassetlaw)
Smith, Louis W. (Sheffield, Halls)


Emmott, Charles E. G. C.
McLean, Dr. W. H. (Tradeston)
Smith, Sir Robert (Ab'd'n & K'dlne, C.)


Emrys-Evans, P. V.
Macmillan, Maurice Harold
Somerville, Annesley A (Windsor)


Essenhigh, Reginald Clare
Macpherson, Rt. Hon. Sir Ian
Somerville, D. G. (Willesden, East)


Everard, W. Lindsay
Macqulsten, Frederick Alexander
Sotheron-Estcourt, Captain T. E.


Flelden, Edward Brocklehurst
Maitland, Adam
Southby, Commander Archibald R. J.


Foot, Dingle (Dundee)
Mallalieu, Edward Lanceiot
Spencer, Captain Richard A.


Ford, Sir Patrick J.
Manningham-Buller, Lt.-Col. Sir M.
Spender-Clay, Rt. Hon. Herbert H.


Fremantle, Sir Francis
Margesson, Capt. Rt. Hon. H. D. R.
Spens, William Patrick


Fuller, Captain A. G.
Martin, Thomas B.
Stewart, J. Henderson (Fife, E.)


Ganzoni, Sir John
Mason, David M. (Edinburgh, E.)
Stones, James


Gault, Lieut.-Col. A. Hamilton
Mayhew, Lieut.-Colonel John
Storey, Samuel


Gledhill, Gilbert
Mellor, Sir J. S. P.
Stourton, Hon. John J.


Glossop, C. W. H.
Mitchell, Sir W. Lane (Streatham)
Strickland, Captain W. F.




Sugden, Sir Wilfrid Hart
Ward, Irene Mary Bewick (Wallsend)
Windsor-Clive, Lieut.-Colonel George


Thompson, Sir Luke
Ward, Sarah Adelaide (Cannock)
Wise, Alfred R.


Thomson, Sir James D. W.
Waterhouse, Captain Charles
Womersley, Sir Walter


Thorp, Linton Theodore
Watt, Major George Steven H.
Worthington, Sir John


Titchfield, Major the Marquess of
Wells, Sidney Richard



Touche, Gordon Cosmo
Williams, Charles (Devon, Torquay)
TELLERS FOR THE NOES.—


Tufnell, Lieut.-Commander R. L.
Williams, Herbert G. (Croydon, S.)
Lieut.-Colonel Sir A. Lambert Ward


Turton, Robert Hugh
Wills, Wilfrid D.
and Mr. James Stuart.


Wallace, Sir John (Dunfermline)
Wilson, Lt.-Col. Sir Arnold (Hertf'd)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

9.26 p.m.

Commander COCHRANE: I desire to raise an issue rather different from that which has just been discussed on the Amendment. I would ask the Committee to direct their attention to the fact that this Clause is one of a rather unusual type for a Finance Bill in that it seeks to carry out national policy. It is not directly concerned either with the imposition or omission of taxation; that is only incidental to the purpose of carrying out a national policy in the national interest. The Clause, indeed, is described as being to deal with contributions paid for the purpose of rationalising industry. Hon. Members will remember that last night we had a discussion of the meaning of the words "get up" and the Financial Secretary was able to satisfy the Committee that that was a desirable expression to use. I do not wish this evening to invite my hon. Friend to give a dictionary definition of the word "rationalise," but I do seriously invite him to tell the Committee what is the Government view of the meaning of this policy of rationalising, because in paragraph (b) of Subsection (2) of this Clause one of the conditions which has to be fulfilled before this remission of taxation can be made is that the scheme must be in the national interest. I think it is essential before we part with this scheme that the Committee should have a very clear statement from the Government as to what in their view is the national interest in this matter of the rationalisation of industry.
I would like to explain why I make that request. This word "rationalisation" has come to have a sort of specialised meaning. In its ordinary plain meaning, as I understand it, to rationalise industry would merely mean to deal with it in a common sense way; but "rationalise" has come to have a specialised meaning, it has come to mean the centralisation of production. I want to ask my hon. Friend if that is the meaning attached to it in this Clause.
If so, I see very grave objections to the proposals of the Government. I would like to remind hon. Members of the position of industry in this country at present. There are in this country about 130,000 factories. If you are going by this means or any other to try and concentrate production and do away with a large number of the small fatcories you will raise a tremendous problem, and I do not think that should be done by a Clause like this in a Finance Bill.
It is sometimes said that the inevitable tendency is for these industrial units to grow larger and larger and that this would be merely to follow up that tendency. That is not the case. In 1930 the number of factories in this country which employed between 500 and 1,000 persons was 949. In 1933 that figure had fallen to 880—a drop of 69. Even more remarkable are the figures for factories employing a thousand persons and upwards. In 1930 the number of these was 421 and in 1933 it had fallen to 335. That means to say that in the three years between 1930 and 1933 the number of factories employing more than 500 persons had fallen from 1,370 to 1,215.
I want briefly to address myself to the question whether this is or is not a desirable tendency and whether it is in the national interest that the Government should encourage an undoubted tendency in industry to-day for the formation of more small units and the suppression of a larger unit, or whether they are in fact proposing to give to this word "rationalisation" what in the past has been its popular meaning, namely, the centralisation of production. I can illustrate my meaning very briefly by reference to the conditions in the distressed areas. I happen to have the honour to represent part of the industrial area of Scotland. There our main preoccupation is to try to introduce fresh industries. That is the only way in which we can see any general and permanent solution of our difficulties. We want the industries spread; we want them divided into smaller portions.
If I am right in that view, that that is really one of the things which is required to ameliorate the conditions in our distressed areas, I do not think there can be any two definitions of what is in the national interest as stated in the Clause. It must be that when the Government give their certificate for the exemption from Income Tax, it will only be given in those cases—I care not what the industry may be—where plant would first of all be suppressed in those very large units and last of all, and only in the last resort, in those small factories which are spread about the country and which are of such enormous value in giving a diversification of industries throughout the country.
There is, in my mind, and in the minds of many people responsible for small industries in this country, a very real fear that this Clause is merely another weapon in the already overstocked armoury of the big trusts in order to enable them to suppress their small competitors. I would ask for a very definite assurance that that is not the case, that the Government, in applying their very wide phrase, "the national interest," will bear in mind the conditions in the distressed areas, and that they will give us a definite assurance that the Clause will not be used for the suppression of the small industrialists, who, after all, are the backbone of the industry of this country.

9.38 p.m.

Mr. ATTLEE: I would like to say a word in support very largely of the line just taken by the hon. and gallant Member for Dumbartonshire (Commander Cochrane). We are embarking here on a very definite piece of policy called rationalisation, but I should like to know from the Government whether they have any plan for what is real rationalisation and not the kind of irrationalisation which we see very often. The hon. and gallant Member referred to the distressed areas. It is obvious, if you are going to have a rational organisation of industry, that you have to consider the location of industry and the utilisation of the resources of the country and of the social capital that has been sunk in various parts of the country. You do not get that necessarily by a rationalisation scheme, which may be based solely on
the question of what is the most profitable way to carry on a particular industry from the point of view of the owners of that industry.
It may and does happen that that produces profit for a certain group of owners but very heavy losses both for the nation and for the locality, when the works are closed down in one locality and concentrated somewhere else, and it may very well be that the works, from the national point of view, would be more economically situated, let us say, in a distressed area than transferred to the outskirts of London or South-East England, where there is a growing concentration of industry. We want to know from the Government, therefore, whether this particular weapon, if one may so call it, introduced in this Bill is to be used in a rational way in accordance with some national plan.
If the Minister can say that this power is being sought because the Government are determined to deal with the whole question of the distressed areas, because they realise that the location of industry is a matter in which the State is concerned, and because they realise that the State has often to bear very heavy losses, whereas the profits of rationalisation go elsewhere, then there is a case for it, but if it is put in merely as a way of giving an advantage to those who are carrying out a particular form of industrial reconstruction, which may in its total repercussions lead to very great hardships in certain districts and actually to a loss to the country and, as the hon. and gallant Member says, counteract what is sought to be done in the distressed areas, then I think the Committee will be wise to refuse to vote for this Clause.

9.42 p.m.

Mr. A. BEVAN: Those hon. Members who represent distressed districts cannot allow this Clause to pass without challenge and without explanation. It is true that the powers that the Board of Trade will have under the Clause are merely powers to give a concession in Income Tax payment and to withhold that concession from those persons who have to pay a penalty for contravening a scheme, because if hon. Members look at the last Sub-section of the Clause, they will see there that those promoting a scheme are to receive a concession, and if anyone is involved in expense in fighting the
scheme, he cannot count that as an expense of his business. If anyone in an industry makes a payment to promote the value of his capital by buying out his competitor, he can claim that as an expense of his business, but if the other fellow who is to be bought out, or smashed, or driven to the wall involves himself in expense in defending his property, that is not regarded as an expense of his business. It is an astonishing position in which capital is being landed in Great Britain. It really is time that the Government took the Committee into their confidence and told us exactly what their industrial plans are, because this kind of hole-in-the-corner legislation is not good enough. As the hon. and gallant Member for Dumbartonshire (Commander Cochrane) said, this is not the sort of Bill that should deal with this question at all. The Government should bring in a Bill dealing with industrial planning, so that we should know exactly where we were in the matter. The Committee is hopelessly restricted in discussing this Clause.
The Government use the loose word "rationalisation." I have read a number of text books on industrial planning, in order to try to find out what rationalisation means, and as far as I can gather the fairest and most concise definition of it is to adjust the productive capacity of an industry to the dimensions of the known market and to raise the efficiency of each unit to the optimum point. If you are going to adjust the productive capacity to the dimensions of the known market, you are accepting the existing dimensions of the market as the utmost you can expect to obtain. That seems to me to be merely the codification of scarcity. I know what is the idealisation of it. People say that once the employers in an industry become masters in their own house, once they have got rid of the dead weight of unfertile capital, they will be able to introduce such economies and efficient methods of production as to be able to lower the price of the product and extend employment. It has, however, rarely been known that when employers have obtained full command over an industry they voluntarily reduce the price of the product and introduce more efficient methods. If that be the contention, the last 150 years of capitalist philosophy are falsified, because we always understood
that more efficient methods of production would be introduced into an industry by the inefficient man being driven to the wall. Now we understand that efficiency of production and cheapness of goods is to be obtained by creating a series of monopolies in one industry after another. I should have thought that the experience of the United States of America since 1929 is a complete refutation of the hope—

The DEPUTY-CHAIRMAN: I think the hon. Member had better get to the Clause, and to the question whether there should be a reduction of Income Tax on account of these expenses.

Mr. BEVAN: If you will look at the Clause, Captain Bourne, you will see that the President of the Board of Trade is entitled to give a certificate for certain reasons. Are we not entitled to challenge the reasons? I think that I am justified in making the contention that to try to promote prosperity by giving the producer of an article command over its price and to try to bestow profitability upon an industry by organising restriction in its production has, all over the world, been shown to be the wrong way out of a depression. It has been shown in the United States, and it will be shown here. If we are to find our way out of the depression, it must be by augmenting the market and not by contracting the market by these methods. It must be by adding to the purchasing capacity of the consumers by allowing the price of goods to fall.

Mr. MABANE: What about Russia?

Mr. BEVAN: The hon. Member knows that there is no Member in the Committee who is more anxious to follow up an interruption than I am, but if I attempted to follow up that interruption I should have the Chairman stop me. I am suggesting to the Committee that it is not in the national interest that schemes of this kind should be sanctioned by the Board of Trade. I would suggest to those hon. Members who believe in the persistence of the capitalist system that this is slow poison. It has been pointed out by Sir Arthur Salter and by many economists that what is wrong with the system at the present time is its complete lop-sidedness. Some industries are given artificial control over the price of their products, and other industries have to
sell their products in a competitive market. Some industries have to buy their raw materials which enters into the cost of production in a controlled market, and they have to sell their products in a free market. That is an impossible set of circumstances, and it cannot go on. In one part of the system there is complete rigidity, and in the other part of the system there is anarchic flexibility.
This sort of legislation simply promotes the lop-sidedness and dis-equilibrium which exists in the whole system. One of our greatest difficulties is that our export industries have to sell their products in a world market where there is no control, and their cost of production has been driven up by their having to buy the products of a controlled industry. So long as you pump that slow poison into the industrial system, it will never be able to recover. The Committee is entitled to have considerations of this kind brought before it in a manner that will lend itself to proper and adequate discussion, instead of inserting them in a Finance Bill. My right hon. Friend the Member for Limehouse (Mr. Attlee) has suggested that we ought to be able to ask the Minister what sort of schemes are likely to be sanctioned by the President of the Board of Trade. I am now informed in South Wales that the margins of security afforded by capitalist enterprise are so narrow that you have to shift an industry 20 miles in order to gain an advantage in the market. Here we have an island across which, compared with America or Germany, you could throw a stone. Here is an island which ideally lends itself to economic organisation. We ought to be able to say where an industry should exist. We ought to be able to say in what parts of the country the people could reasonably look forward to permanent employment for an indefinite period. We are not able to say that. (Interruption.) Hon. Members must try to control their frivolity. We are discussing a very serious matter, and we have very few opportunities of discussing such matters. I represent a constituency in which 16 per cent. of the adult population is unemployed, and that is not a very frivolous matter. Here we are parting with powers which may be used by the President of the Board of Trade by departmental edict that would sentence that
area to death. That is a very serious matter.

The DEPUTY-CHAIRMAN: I think the hon. Member is reading rather more into the Clause than it contains. The Clause merely says that in certain circumstances certified by the Board of Trade an industry may deduct certain expenses from Income Tax returns. I think that we had better keep to what the Clause says and not read more into it.

Mr. BEVAN: The Government obviously believe that the enticements which they are giving are adequate to bring about a result, because their suggestion in the Clause is that if exemptions from tax are given for a purpose the purpose will be realised. I want to know what these purposes are. I want to know what is the test and what is the criterion. We have industries in South Wales that has been reorganised, for which capital has been provided by extra constitutional means, in order to get 20 miles nearer to the coast. I want to know whether that is the sort of thing that is going to be promoted under this Clause. The Committee are entitled to have a reply. I regret that in this Bill, as in a great many other Bills, principles are being brought before this House in a manner which does not allow of their proper examination and consideration. Over and over again that has been done. No Government of modern times has brought legislation by discussion into greater disrepute than this miserable collection of has-beens that we have got. It is really too bad that when we are doing our utmost to defend the interests of our constituents we should be prevented from doing so by a Government which is trying to legislate in a hole-and-corner fachion. The Committee have not been treated fairly, and I protest against whole communities being sentenced to industrial decay and death by methods which are not having adequate discussion in this House.

9.57 p.m.

Mr. KIRKWOOD: I am very glad that the hon. and gallant Member for Dumbartonshire (Commander Cochrane) takes exception to this Clause, because he represents the constituency bordering on my own, and he knows from bitter experience what rationalisation has done for the shipbuilding and engineering industry not only on the Clyde but on the
Tyne and all over the country. Like the hon. and gallant Member for Dumbartonshire, I should like to know whether it is to be the policy of the Government to encourage rationalisation along the lines on which it has been working up to now. The shipbuilding and engineering employers have formed a combination to enable them to compensate the shipyards and engineering shops that happen to be redundant, and that is all right for the shareholders, but no compensation whatever has been given to the workers—none. They have been thrown on the streets. This goes back to the time when the Lord President of the Council, who was last week the Prime Minister, went to America in 1929 on a peace excursion. He was Prime Minister at that time, and as a gesture he stopped the building of a destroyer in Dalmuir shipyard in my constituency. I challenged him at that time to say what compensation the workers were to get.

The DEPUTY-CHAIRMAN: I hardly think that matter can arise on this Clause.

Mr. KIRKWOOD: But I am trying to show how rationalisation worked out for the people whom I represent. I was in a position at that time to tell the House that that firm wanted the money and they got compensation, and the Prime Minister said the compensation for the workers was "our incomparable social services." That still is the position. I want to know if the Committee are prepared to pass this Clause, which is going to throw the workers out of employment without any consideration whatever. Formerly the employers had to compensate one another, and now, by this Clause, the Government are going to compensate them over and above that. I want to know why there should be this special consideration for the shareholders, and I want some consideration shown to the workers. In Sub-section (2) of Clause 24 of the Bill it states:
(a) that the primary object of this scheme is the elimination of redundant works or machinery or plant from use in an industry in the United Kingdom.
Here is another serious point to which I would like to draw attention. This is unprecedented. In our housing schemes there is no compensation for the owner of slum property, but here we are going to compensate engineering works that
are gigantic slums, with machinery out of date by 20, 30 or 40 years, and not only the machinery but the whole construction of the works. To meet existing conditions it is essential that those works should be recast, re-designed; not only should there be new buildings but new, up-to-date machinery. To secure that we are going to give compensation for redundant works. In that way we shall provide slum property owners with a good case for coming to the Government to claim that they ought to be compensated too. I hope the Committee will not let this Clause go through. I understand that it has been said from this side of the House that there is a scarcity of skilled labour on the Clyde. It is untrue. Although it was said by the Lord Provost of Glasgow it is absolutely untrue. In the engineering industry we on the Clyde are supplying every district in England with skilled labour, and we can give them ever so much more. This talk about a shortage of highly-skilled engineers is all so much nonsense. I should be out of order at the moment in explaining to the House how the Chancellor of the Exchequer, a fortnight ago, had some, grounds for making that statement, but that statement, on the face of it, is untrue, because we can meet all the demands for highly-skilled labour if that highly-skilled labour is treated as highly-skilled labour ought to be treated.
In the Partick Division of Glasgow we have a case now. The whole City of Glasgow and Clydebank are doing their very best to try to retain a marine engineering shop of world-wide reputation. Within the last four years we have had 14 engineering and shipyards shut down as a result of rationalisation. It is perfectly true that there have been 18 similar works and shipyards shut on the Clyde. What has become of these men? We have Henderson's Engineering Shop at Partick. They are at their wits end. The workers held a meeting, presided over by the Lord Provost of Glasgow, and invited to it all the Members of Parliament from the Glasgow area. They are anxious to work, and dread the idea of being thrown on to our incomparable social services. These incomparable social services mean that instead of receiving £3 a week, the men will be practically thrown on the scrapheap. This House evidently does not realise what is behind this Clause, or the power
that it is giving to the President of the Board of Trade, who will have to act as if he were an automaton. Here we are dealing with human beings, and there is no better asset to the British Empire than the shipbuilders and engineers who are to be thrown adrift. Think what it means to be reduced from £3 10s. or £3 a week to £1 a week. There are no better men in this House or anywhere else and they are to be asked to allow themselves to be reduecd to £1 a week. That is what rationalisation means. This House has a right to consider all these things. It has no right merely to consider this from the point of view of pounds, shillings and pence. You are destroying the very best asset which you could possibly have. I hope that for the good of Britain and for the future hope of generations yet unborn, the House will reject this Clause.

10.9 p.m.

Captain WATERHOUSE: I apologise for asking the Committee, after that diatribe, to turn its attention once more to Clause 24 of the Finance Bill. I am surprised that the two hon. Members for Dumbarton, who only a short time ago had £4,500,000 given to them and a promise of a further sum, should be raising such an outcry against a remission of taxation which I believe to be a proper trading expense. They admitted that this was a remission of taxation, they went on to call it a subsidy, and they finished up by calling it a payment of compensation. There is no such thing involved in this Clause. If a man insures his premises against fire or his workmen against the Workmen's Compensation Act is it or is it not a trade expenditure? Of course, it is a trade expenditure. If it is necessary to pay a levy to some association in order to preserve the business, surely that is a trade expenditure. The hon. Member for Ebbw Vale (Mr. A. Bevan) said that the inefficient should be driven to the wall. That is all very well in the City of London. You can have the healthy bankruptcy there. When it happens, that business house disappears. But in industry it is not so. The plant remains, and is bought up by some combine. More price-cutting takes place in that industry, and the very fears of the hon. Member for Dumbarton Burghs (Mr. Kirkwood) are realised. You get the smallest firm
first going out of business and then the larger amalgamation taking a greater control in industry.
I, myself, have had some experience of one of these reorganisation schemes. I particularly emphasise that word as opposed either to rationalisation or planning. In that particular industry, admittedly a small one, it has had the effect of enabling the small businesses, which would have been forced out, to carry on. It has undoubtedly displaced a certain amount of labour, but all, in so far as they were wage-earners, have found employment since. In fact, there has been a definite shortage of labour in that industry, and the only people out of a job are certain highly-paid officials. I think that the arguments on the other side, although hon. Members keep setting up Aunt Sallies to knock down, have been proved to be completely falsified by facts. I hate Government interference in any form, but I like to help industries to help themselves. I believe that this provision is by far the most important in the whole Budget. It is helping industries to help themselves.

10.12 p.m.

Mr. COOPER: I am not sure whether my hon. and gallant Friend was in the House when the last Amendment was discussed, but if he was, I hope that he will remember that on that occasion, owing to the wide manner in which it was moved and supported, I covered a good deal of ground in support of the Clause as a whole, and I am not going to attempt to repeat my speech. My hon. and gallant Friend asked for a definition of the word "rationalisation." Rationalisation does not appear at all in the text of this Bill, although it does appear in the rubric. That will never be part of the law of the land. I share the distaste of this new word as much as anybody. It is very true that people get hold of a word nowadays and think that it will solve every problem. Nor would I be led to define exactly what the Government meant if they were committed to such a word as this. I am not going to lay down a general trade policy.

Commander COCHRANE: I did not stress the word "rationalisation" but the words in Sub-section (2), "that the scheme is in the national interest." It is to that that I asked the hon. Gentleman to turn his attention.

Mr. COOPER: I was asked what was meant by a scheme being in the national interest. That is certainly a question that should be put to the Board of Trade. I have no doubt that every case will be treated upon its merits. The hon. Member for Ebbw Vale (Mr. A. Bevan) tried to put us into the dilemma, in which those in politics often find themselves and in which some people like to find themselves, which is that you must either stick to the old-fashioned doctrine of laissez faire, letting the weak go to the wall according to the remorseless and pitiless policy of the Manchester school of the last century, or adopt the view that everything must be controlled. That is not the point of view either of His Majesty's Government or of the political party to which I belong. We believe that you need not be driven to either of those logical extremes, and that, as usual, the truth lies somewhere in the middle.
In the modern State with its enormous and unprecedented industrial development the State must assist industry. Nobody is more grateful than the hon. Member for Dumbarton Burghs (Mr. Kirkwood) when the State does so. We say that, while it is not our business to control industry, it is our business to guide industry when our guidance seems necessary; to put on the brake where the brake is necessary, and to put on the spur where the spur can do some good. In this instance, we have thought it wise to assist the tendency in industry to help itself and to get itself into better form to compete with its competitors all over the world as by introducing new machinery which will assist the whole industry, workers as much as the employers. We say in the Bill that when they undertake some scheme to the satisfaction of those best qualified to judge, that is, the authorities of the Board of Trade and the President of the Board of Trade, and when they incur expenditure in order to promote a scheme of that kind, we will allow them to count that expenditure as part of their trade expenses; we will allow them a remission of taxation. Is that an unreasonable act?
I have been asked what is meant by "rationalisation." I am surprised at those words coming from hon. Members opposite, from whom there has been much criticism. I do not quarrel with it. I appreciate also the point of view of those
who say: "We want our industries to continue as they are. We do not want our small industries to be forced into the big combines. We deplore that tendency, and we look back upon the past with regret." There is much that must give way to change in the modern world. Hon. Members know that half the troubles—which they deplore as much but not more than we do—of the distressed areas is due to lack of capital and lack of rationalisation. It is not for them to criticise us when we take one step in the direction of the development which they themselves so much desire.

10.19 p.m.

Mr. EDWARD WILLIAMS: I do not propose to spend much time in challenging the philosophy which has just been expressed from the Government Front Bench. There is substance in the last few words. Members on this side of the House ought perhaps to complain least when the Government make an attempt at planning, as indicated in the Clause. The mining industry has certainly suffered from internecine competition. The weakest have been driven to the wall, but the Government have not helped the industry in the last few years. They have not helped to create an expansion in the export market such as would substantially help the distressed areas, and the distressed areas are suffering primarily through a contraction in the export market. I can appreciate the Government's endeavours to increase the competitive capacity of efficient concerns by compensating, by remission of taxation, concerns that will agree to absorb competitors, and by that means make them redundant; but we are concerned about the enormous number of persons who are made to suffer as a consequence of this policy by being automatically rendered unemployed and redundant. I think it will be admitted by hon. Members from South Wales that there is hardly any prospect of improvement in South Wales until the Government bring before the House in a Bill a policy to deal with the distressed areas.
The location of industry is a vital matter. In my constituency 40 per cent. of the normal complement of persons engaged in the mining industry are now idle, and there is no prospect, as far as I can see, of their being absorbed. Nevertheless it is possible, in accordance with
the policy contained in this Bill, for certain employers in the mining industry to present to the Board of Trade a scheme under which still more small mines may be closed, and for the Board of Trade to decide that such a closure should take place in the national interest, when the employers would receive a rebate of taxation as compensation. I suggest to the Financial Secretary that it is essential to define the national interest. It may be considered that the closing of such collieries in South Wales would be in the national interest, but it would certainly be harmful to local interests, and would ultimately lead to further grants to distressed areas to make good the damage that would arise from this policy.
Surely, the term "national interest" ought to be further considered. Something might be done in the interest perhaps of London and Greater London in what might be described as the national interest, that would result in irreparable damage to places like South Wales and the places referred to by the hon. Member for Dumbarton Burghs (Mr. Kirkwood). We on these benches think that the means by which the Government are attempting to solve what ultimately is a social problem are wrong means, because instead of trying to expand the effective market for goods, they are subsidising firms in order to increase the competitive capacity of those firms in an ever-contracting market. We think that that is wrong. They are destroying the effective market for goods. The means test is doing that in distressed areas.

The DEPUTY-CHAIRMAN: The hon. Gentleman is now getting much beyond this Clause.

Mr. WILLIAMS: I have no desire to get beyond the Clause at all, but surely we are entitled to put up the alternative to the policy contained in this Clause.

The DEPUTY-CHAIRMAN: I hardly think so. The hon. Gentleman is entitled to argue that the Clause is a bad one, but I do not think that he can go beyond that point.

Mr. WILLIAMS: I suggest that the Government ought to give some additional reasons to those which have been stated by their spokesman from the Front Bench. If it is in the national
interest that these schemes have to be considered, it is rather singular that it should be necessary to compensate anybody. If it is essential to compensate shareholders in the national interest, it is equally logical to compensate workmen who are rendered idle as a consequence of this policy. The Government ought to reconsider the whole matter from that angle. Obviously, such schemes as will be propounded will be for the purpose of reducing costs of production, and the major item in the casts of production will be labour costs. They will tend to increase unemployment, and there ought to be provision to compensate those persons who are rendered idle deliberately by encouraging, through the means of this Clause, a policy of this character. We ask for further consideration of the matter; otherwise we shall be obliged to divide against the Clause.

10.27 p.m.

Captain HAROLD BALFOUR: Before we pass from the Clause, I wish to draw the attention of the Committee to the powers given under Sub-section (8) to the President of the Board of Trade and to certain of his officers, and to ask the Financial Secretary or some other Minister of the Government for some explanation of these powers, which in a new venture, such as this Clause is, in a Finance Bill, are extraordinarily wide, and are to be deprecated as regards giving such authority to the bureaucracy. Sub-section (2) says that the Board of Trade shall certify a scheme if it is in the national interest. Sub-section (3) says that the Board of Trade shall cancel suc ha schem eunder certain conditions, and then Sub-section (8) gives power to the President of the Board of Trade—quite rightly, I am sure the Committee will agree—but it goes on to say that that power of certifying a scheme in the national interest shall be delegated also to:
A secretary, under-secretary, or assistant secretary of the Board or any person authorised. … by the President of the Board of Trade.
So that logically the President of the Board of Trade could, if he so liked, delegate the powers of certifying a sheme to be in the national interest or to cancel a scheme in the national interest, to a lift-man in the Board of Trade or any
other person he liked. I know that that is reducing the thing to the extreme, but nevertheless this House is rightly jealous of its powers. We do not like to give powers to other than Ministers directly answerable to the House of Commons. It is to be deprecated very much that such a wide provision should be inserted on the introduction of a new Clause. If the Government reply is that this is a usual provision in Board of Trade legislation, I think that the reply of the Committee will be that this is an unusual measure which has never been introduced before, an dthat past precedents for powers given to the Board of Trade should not necessarily apply to a provision such as this one. It is a matter of very great importance, and I trust that the Financial Secretary to the Treasury, who felt it necessary to intervene before I was able to make this point, will pay that attention to the remarks of his supporters that the rest of the Committee desire should be paid to the remarks of Back-Bench Members.

10.31 p.m.

Mr. COOPER: I do not think that my hon. and gallant Friend need be unduly alarmed at this Clause. It is a common form, which has been used in many Acts of Parliament before. When it refers to the Board of Trade it is necessary to define exactly what is meant by the Board of Trade. The Clause gives the definition as the President of the Board of Trade or any one deputed by him, on his express authority. There is no fear of anyone doing anything for which the Minister is not responsible to Parliament. With regard to any action taken under the Clause the President of the Board of Trade will be responsible to the House of Commons. If the House cannot trust their own Ministers, they have always power to get rid of them. No power has been given to the Board of Trade in this Clause that has not been given
many times before.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 222; Noes, 47.

Division No. 242.]
AYES.
[10.35 p.m.


Agnew, Lieut.-Com. P. G.
Cross, R. H.
Hope, Capt. Hon. A. O. J. (Aston)


Aske, Sir Robert William
Crossley, A. C.
Hornby, Frank


Balley, Eric Alfred George
Cruddas, Lieut.-Colonel Bernard
Horobin, Ian M.


Baldwin, Rt. Hon. Stanley
Culverwell, Cyril Tom
Horsbrugh, Florence


Balfour, Capt. Harold (I. of Thanet)
Dalkeith, Earl of
Howard, Tom Forrest


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Davies, Edward C. (Montgomery)
Hudson, Capt. A. U. M. (Hackney, N.)


Benn, Sir Arthur Shirley
Denman, Hon. R. D.
Hume, Sir George Hopwood


Bennett, Capt. Sir Ernest Nathaniel
Dickie, John P.
Hunter-Weston, Lt.-Gen. Sir Aylmer


Bernays, Robert
Dower, Captain A. V. G.
Inskip, Rt. Hon. Sir Thomas W. H.


Bevan, Stuart James (Holborn)
Eastwood, John Francis
Jackson, Sir Henry (Wandsworth, C.)


Blindell, James
Ellis, Sir R. Geoffrey
James, Wing.-Com. A. W. H.


Bossom, A. C.
Elliston, Captain George Sampson
Jamieson, Rt. Hon. Douglas


Boulton, W. W.
Elmley, Viscount
Jones, Henry Haydn (Merioneth)


Bowyer, Capt. Sir George E. W.
Emmott, Charles E. G. C.
Jones, Lewis (Swansea, West)


Boyce, H. Leslie
Emrys-Evans, P. V.
Kirkpatrick, William M.


Braithwaite, J. G. (Hillsborough)
Entwistle, Cyril Fullard
Lamb, Sir Joseph Quinton


Broadbent, Colonel John
Everard, W. Lindsay
Law, Sir Alfred


Brocklebank, C. E. R.
Fermoy, Lord
Law, Richard K. (Hull, S. W.)


Brown, Col. D. C. (N'th'l'd., Hexham)
Fielden, Edward Brocklehurst
Leech, Dr. J. W.


Brown, Brig.-Gen. H. C. (Barks., Niwb'y)
Foot, Dingle (Dundee)
Lees-Jones, John


Browne, Captain A. C.
Ford, Sir Patrick J.
Leighton, Major B. E. P.


Buchan-Hepburn, P. G. T.
Fremantle, Sir Francis
Lennox-Boyd, A. T.


Burghley, Lord
Fuller, Captain A. G.
Levy, Thomas


Burgin, Dr. Edward Leslie
Ganzoni, Sir John
Lewis, Oswald


Burnett, John George
Gault, Lieut.-Col. A. Hamilton
Lindsay, Noel Ker


Butt, Sir Alfred
Gledhill, Gilbert
Llewellin, Major John J.


Caporn, Arthur Cecil
Glossop, C. W. H.
Lloyd, Geoffrey


Carver, Major William H.
Gluckstein, Louis Halle
Lockwood, John C. (Hackney, C.)


Castlereagh, Viscount
Graves, Marjorie
Loder, Captain J. de Vere


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Grigg, Sir Edward
Loftus, Pierce C.


Chamberlain, Rt. Hon. N. (Edgbaston)
Grimston, R. V.
Lovat-Fraser, James Alexander


Chapman, Col. R. (Houghton-le-Spring)
Gunston, Captain D. W.
Lumley, Captain Lawrence R.


Chapman, Sir Samuel (Edinburgh, S.)
Guy, J. C. Morrison
McCorquodale, M. S.


Colman, N. C. D.
Hacking, Rt. Hon. Douglas H.
MacDonald, Rt. Hon. M. (Bassetlaw)


Colville, Lieut.-Colonel J.
Hannon, Patrick Joseph Henry
McKie, John Hamilton


Conant, R. J. E.
Harbord, Arthur
Macmillan, Maurice Harold


Cooper, A. Duff
Harvey, George (Lambeth, Kenningt'n)
Manningham-Buller, Lt.-Col. Sir M.


Cooper, T. M. (Edinburgh, W.)
Haslam, Henry (Horncastle)
Margesson, Capt. Rt. Hon. H. D. R.


Courthope, Colonel Sir George L.
Haslam, Sir John (Bolton)
Martin, Thomas B.


Craddock, Sir Reginald Henry
Headlam, Lieut.-Col. Sir Cuthbert
Mason, Col. Glyn K. (Croydon, N.)


Craven-Ellis, William
Hellgers, Captain F. F. A.
Mayhew, Lieut.-Colonel John


Critchley, Brig.-General A. C.
Heneage, Lieut.-Colonel Arthur P.
Mellor, Sir J. S. P.


Crookshank, Col. C. de Windt (Bootle)
Herbert, Capt. S. (Abbey Division)
Mills, Major J. D. (New Forest)


Crookshank, Capt. H. C. (Gainsb'ro)
Hills, Major Rt. Hon. John Waller
Mitchell, Harold P. (Br'tf'd & Chisw'k


Mitchell, Sir W. Lane (Streatham)
Ross, Ronald D.
Storey, Samuel


Molson, A. Hugh Elsdale
Ross Taylor, Walter (Woodbridge)
Stourton, Hon. John J.


Monsell, Rt. Hon. Sir B. Eyres
Ruggles-Brise, Colonel Sir Edward
Strickland, Captain W. F.


Moore, Lt.-Col. Thomas C. R. (Ayr)
Runge, Norah Cecil
Stuart, Hon. J. (Moray and Nairn)


Morgan, Robert H.
Russell, Albert (Kirkcaldy)
Sugden, Sir Wilfrid Hart


Morris-Jones, Dr. J. H. (Denbigh)
Russell, Alexander West (Tynemouth)
Thomas, James P. L. (Hereford)


Morrison, G. A. (Scottish Univer'ties)
Russell, R. J. (Eddisbury)
Thompson, Sir Luke


Muirhead, Lieut.-Colonel A. J.
Rutherford, John (Edmonton)
Thomson, Sir James D. W.


Nall, Sir Joseph
Rutherford, Sir John Hugo (Liverp'l)
Thorp, Linton Theodore


Nation, Brigadier-General J. J. H.
Salmon, Sir Isidore
Titchfield, Major the Marouess of


Nunn, William
Salt, Edward W.
Todd, A. L. S. (Kingswinford)


Patrick, Colin M.
Samuel, M. R. A. (W'ds'wth, Putney)
Touche, Gordon Cosmo


Peake, Osbert
Sandys, Duncan
Tufnell, Lieut.-Commander R. L.


Pearson, William G.
Selley, Harry R.
Turton, Robert Hugh


Penny, Sir George
Shaw, Captain William T. (Forfar)
Wallace, Sir John (Dunfermline)


Percy, Lord Eustace
Shepperson, Sir Ernest W.
Ward, Lt.-Col. Sir A. L. (Hull)


Perkins, Walter R. D.
Simmonds, Oliver Edwin
Ward, Irene Mary Bewick (Wallsend)


Petherick, M.
Simon, Rt. Hon. Sir John
Ward, Sarah Adalaide (Cannock)


Pownall, Sir Assheton
Sinclair, Col. T. (Queen's Unv., Belfast)
Waterhouse, Captain Charles


Procter, Major Henry Adam
Smiles, Lieut.-Col. Sir Walter D.
Watt, Major George Steven H.


Pybus, Sir John
Smith, Bracewell (Dulwich)
Wells, Sydney Richard


Raikes, Henry V. A. M.
Smith, Sir J. Walker- (Barrow-in-F.)
Williams, Herbert G. (Croydon, S.)


Ramsay, T. B. W. (Western Isles)
Smith, Louis W. (Sheffield, Hallam)
Wills, Wilfrid D.


Ramsbotham, Herwald
Smith, Sir Robert (Ab'd'n & K'dlne, C.)
Windsor-Clive, Lieut.-Colonel George


Ramsden, Sir Eugene
Somerville, Annesley A. (Windsor)
Wise, Alfred R.


Reed, Arthur C. (Exeter)
Sotheron-Estcourt, Captain T. E.
Wood, Sir Murdoch McKenzie (Banff)


Reid, William Allan (Derby)
Southby, Commander Archibald R. J.
Worthington, Sir John


Remer, John R.
Spencer, Captain Richard A.



Roberts, Sir Samuel (Ecclesall)
Spender-Clay, Rt. Hon. Herbert H.
TELLERS FOR THE AYES.—


Robinson, John Roland
Stanley, Rt. Hon. Lord (Fylde)
Sir Walter Womersley and Major


Ropner, Colonel L.
Stewart, J. Henderson (Fife, E.)
George Davies.


Rosbotham, Sir Thomas
Stones, James



NOES.


Adams, D. M. (Poplar, South)
Hall, George H. (Merthyr Tydvil)
Milner, Major James


Attlee, Rt. Hon. Clement R.
Hamilton, Sir R. W. (Orkney & Zetl'nd)
Owen, Major Goronwy


Banfield, John William
Harris, Sir Percy
Paling, Wilfred


Bevan, Aneurin (Ebbw Vale)
Holdsworth, Herbert
Rothschild, James A. de


Buchanan, George
Janner, Barnett
Salter, Dr. Alfred


Cleary, J. J.
Jones, Morgan (Caerphilly)
Smith, Tom (Normanton)


Cripps, Sir Stafford
Kirkwood, David
Strauss, G. R. (Lambeth, North)


Daggar, George
Lansbury, Rt. Hon. George
Tinker, John Joseph


Davies, David L. (Pontypridd)
Leonard, William
West, F. R.


Dobbie, William
Logan, David Gilbert
White, Henry Graham


Edwards, Sir Charles
Lunn, William
Williams, Edward John (Ogmore)


Gardner, Benjamin Walter
Mabane, William
Williams, Thomas (York, Don Valley)


Grenfell, David Rees (Glamorgan)
Macdonald, Gordon (Ince)
Wilmot, John


Griffith, F. Kingsley (Middlesbro', W.)
McEntee, Valentine L.



Griffiths, George A. (Yorks, W. Riding)
Maclean, Neil (Glasgow, Govan)
TELLERS FOR THE NOES.—


Groves, Thomas E.
Mainwaring, William Henry
Mr. John and Mr. D. Graham.


Grundy, Thomas W.
Mallalieu, Edward Lancelot

Clause 25 ordered to stand part of the Bill.

CLAUSE 26.—(Power to issue new securities in, lieu of Local Loans stock.)

The following Amendment stood upon, the Paper:

In page 19, line 15, at the end, add
always provided that no statutory sinking fund shall be attached to the issue of such securities."—[Mr. D. Mason.]

Mr. D. MASON: Owing to the lateness of the hour, I shall not move this Amendment, but shall raise the matter on the Report stage.

Clause ordered to stand part of the Bill.

Clauses 27 to 29 ordered to stand part of the Bill.

CLAUSE 30.—(Transfer of sum from Road Fund to Exchequer.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

10.42 p.m.

Mr. G. R. STRAUSS: I cannot let this Clause slip through in the same way as the others. It is a Clause of very considerable importance, and although I do not intend to detain the Committee for long I feel it raises a question which should be brought before the Committee at this stage. In this Clause the Chancellor proposes to raid the Road Fund, and I think I may get some sympathetic support from all quarters of the Committee in protesting against his action in this respect. It is within the knowledge of the Committee that when the Road Fund was set up there were pledges given that the money should be devoted
to the improvement of the road system of the country and to that purpose alone. It is because during the last few years the money has not been used for its proper purpose, but has accumulated and created a surplus, that the Chancellor is able to take the action to which I object. Frankly, if the roads of the country had been properly maintained, if the road system were to-day an adequate system and no improvements were required, I would be perfectly willing that the money should be taken by the Chancellor and used for other purposes.
I agree that hypothecated revenues are bad in any financial system, and that a pledge given on a particular matter in 1909 cannot be binding on Parliament for ever. But it is because I maintain that the Road Fund money has not been used for the purpose for which it is intended; because new roads are urgently needed and old roads need widening, and because the road service of the country is far from what it should be, and the Government have not encouraged local authorities to use the Road Fund for the purpose for which it was instituted, that the money has accumulated and the Chancellor takes it in order to balance his Budget. When the Vote for the Ministry of Transport was under consideration, Member after Member pointed out how seriously inadequate were the road services in his constituency, and what a handicap those inadequate services were to industry, to transport and to the travelling public. Nowadays, as a result of the development of omnibus services and so forth, the public as a whole are vitally interested in having proper roads.
At the present time, not only in the rural districts but throughout the country generally, there are roads which should, long ago, have been widened and improved, towns which should have been by-passed and danger points which should have been eliminated. I say, and I can speak with some knowledge, that in regard to London and other built-up areas the local authorities have not only not been encouraged but have received actual discouragement in connection with the dispensation of Road Fund money for necessary and urgent improvements which would avoid congestion and do away with dangers to life and limb. Under the regulations brought in by the
Government in 1933 the Government only contribute to part of the cost of road widening. In the past the Government used to contribute fully to the cost of necessary road widening but now they only contribute to the actual work and property. They do not contribute to what is, usually, in built-up areas the larger part of the cost, namely, compensation for disturbance and the cost of re-housing people who are displaced.
In London we find in the case of Class I roads which are in urgent need of widening and the improvement of which is agreed by the Ministry of Transport itself to be necessary, when the Government nominally give a 60 per cent contribution, as the compensation factor has been eliminated, the local authority only gets 20 per cent. from the Government and 80 per cent. of the burden falls on the ratepayers. The money which the Chancellor is now taking ought to have been used for those improvements, and it is because of the Government's neglect in that respect that this raid is now taking place. In connection with a most important improvement in London, namely, the widening of Gracechurch Street, the Ministry of Transport wrote in March this year that it could not make a contribution towards the work because all the money in the fund had been allocated. It was indicated that in January the position had been the same. To what was the money allocated? If it had been allocated to road improvements, how was there a surplus of £4,500,000? Had it been allocated to the Chancellor of the Exchequer to enable him to balance his Budget?
However that may be, the situation is extremely unsatisfactory particularly in view of the assertion from the Chancellor and, the Minister of Transport that they intend embarking on a vast five-year plan of road improvement. That sounds bold and revolutionary, but if one takes the day to day administration at present and what has happened last year, one must recognise that local authorities, so far from being encouraged are being discouraged in this matter. The Chancellor said very graciously that if it was found that the Road Fund required more money in future he would consider any application which the Minister of Transport might make. That sort of undertaking was rather humiliating to the Ministry
of Transport and the road interests of the country. But in this connection I would like to ask this question: If the Chancellor of the Exchequer is going to make a, loan to the Road Fund on some future occasion on the application of the Minister of Transport, is interest to be charged on that loan, as in the past? If so, an additional burden will be thrown on the Road Fund, and an additional burden will be put on the development of the roads of the country which should not be put upon them. The Chancellor of the Exchequer is acting in a double capacity. He was accused in the Second Reading debate by the right hon. Member for Darwen (Sir H. Samuel) of being a highwayman, coming along and seizing somebody else's property. He is not only a highwayman; he is something worse, because having come along and seized all the money in the bag and rendered the Road Fund penniless, he is then prepared as a moneylender to say "We have robbed you, and you now have nothing at all; but we are prepared to lend you money at a certain rate of interest in order to keep you alive." The Chancellor of the Exchequer in that transaction seems to be combining the worst characteristics of a highwayman and a moneylender.
I suggest that this is not the time when the Road Fund should be raided, because the Committee must remember that the development of roads in this country depends absolutely on the amount of money in the Road Fund and the willingness of the Government to use that money. Road traffic is growing daily. Congestion on the roads is growing very much worse. The local authorities are carrying heavier burdens than ever. They are unable, out of their own resources, to build or widen the roads necessary, and at the same time there are very large numbers of unemployed people who could be employed in building roads. This is the very worst time to raid the Road Fund, and doing so is a very serious disservice to the best interests of the country. The efficient transport of the country is vital to the proper running of industries, many of which depend very largely on being able to transport their goods quickly and easily from one place to another. Not only industries, but the travelling public are being severely handicapped and penalised by this Clause. I
suggest to the Committee that in order to balance this Budget and make it a popular electioneering Budget, the Chancellor of the Exchequer has taken a short view of this fund that is urgently wanted for other purposes, and is thereby seriously damaging the interests of the country.

10.54 p.m.

Mr. HOLDSWORTH: I regret that we have reached this late hour before coming to this Clause, because in my judgment it is the most distasteful Clause in the whole of the Budget. I do not want to trace the history of the Road Fund, but I know the Chancellor of the Exchequer has disputed the idea on previous occasions that it was ever laid down that the whole of the Petrol Tax, or any of the Petrol Tax for that matter, should be allocated to the development of roads. I do not think it can be challenged so far as the institution of the Road Fund is concerned. I think that when the Road Fund was instituted in the Budget of 1909 or 1910, everybody was agreed that it should be a fund allocated specifically for the development of roads in this country. This is not the first time that a raid has been made upon the Road Fund. As a matter of fact, I think it is the third raid. It is a fact that not one-third of the money that has been raised by taxation on the transport of this country has been paid by the Exchequer for the development of the roads. The responsibility for the development of the roads in this country is laid upon the Ministry of Transport, but the real power to do it rests with the Treasury. I think it is right that the Treasury should have some power over all expenditure, but I suggest that it ought to be possible, at the beginning of any year, for the Treasury to state definitely what amount is to be expended on roads, and then a policy could be formulated by the Minister of Transport, who would know in advance what money could be spent on road development. There is another point. We are all concerned about the loss of life on the roads, and while one much appreciates the efforts made by the Minister of Transport to reduce road accidents, there can be no challenging the statement that there is room for a tremendous improvement of the roads themselves. It is a great mistake that we should at this time take £4,000,000 from the Road Fund. It is often said to
me by members of local authorities that motorists should pay for the use of the roads, and it is because those members of local authorities do not realise the tremendous amount that is taken by the Chancellor of the Exchequer for ordinary Exchequer purposes that they make that statement. If what was paid by the road users was actually used in providing roads for motor transport, no statement of that description would be made.
It is too late to go fully into this question, but I want to raise a protest against the further raiding of the Road Fund at the very moment when we ought to be using our endeavours to make the roads safer for those using them and to provide some employment for those who are suffering from unemployment. I hope we shall take this Clause to a Division, and I should like to see some of those hon. Members who are concerned about the proper road development of this country showing their disapproval of the Clause by going into the Lobby against the Government on it.

10.58 p.m.

Mr. CHAMBERLAIN: The subject of this Clause was fully discussed on the Report stage of the Budget Resolution, and I think it would be unfair to the Committee to repeat at this late hour the arguments and statements of which I then made use. I therefore propose very briefly to deal with the points which have been raised by the two hon. Members who have spoken. First of all, on the question of pledges, it is not the case that everyone will agree that the amount in the Road Fund should be used exclusively for road purposes. As has been pointed out already, this is not the first or the second but the third time that the fund has been used for other purposes. Secondly, on the question of finance, it is obvious that the hon. Member for South Bradford (Mr. Holdsworth) does not appreciate what is the procedure. I have noticed that there is always confusion in the minds of some hon. Members as to the way in which the Road Fund is administered. You cannot simply take money and spend it tomorrow on schemes just because some hon. Member comes along and says, "I think this or that corner should be taken off, or this or that road should be widened." You have to make plans considerably in advance of your work, and it is only by degrees, as those plans come
to maturity, that the money is required. When the hon. Member says that while he does not dispute that the Treasury should have a say as to the amount of money that is spent, yet the Minister of Transport ought to know at the beginning of the year what amount of money he will have available, he is evidently not aware that that is exactly what the Minister of Transport does know, that is to say, he knows what commitments he will have to meet. We have a surplus now in the fund that has accumulated owing to the fact that the economies of 1931 slowed down the commitments; and as the commitments were slowed down, so, of course, the amount of money spent in subsequent years has slowed down, too, and we have for the time being a small balance available in the fund. The £4,500,000 would not do all those things which the hon. Member who spoke first would like done to the roads.
May I make this observation on a remark of the hon. Member for South Bradford, who associated the question of safety on the roads with the expenditure of money on the improvement of the roads. I do not deny that by the expenditure of money you may perhaps increase safety on the roads, but I think that it is going altogether too far to assume that because you widen a road, or cut off a corner, or make it possible, in other words, for motorists to go faster than they have been going, you are adding to the safety of the roads. In the district which I happen to know very well, an investigation has shown that the greatest number of fatal accidents has taken place on the best, widest and most improved roads in the whole of the district. Although nobody would deny that we should do everything we can to reduce the terrible toll of life and damage to limb on the roads, it does not follow we are going to achieve that purpose by splashing money about in all directions. This money is at present idle money lying in the Road Fund. I am proposing to use it for the purpose of decreasing taxation. That does not mean that the commitments of the Road Fund are being prejudiced. We are embarking on a five-year programme which we are negotiating with the local authorities. That programme will be considerably in advance of anything that has been done hitherto in any similar period of time, but it is not going to be diminished by the fact that this
money, which is not now required for any commitments hitherto incurred, is used for the purpose for which I now propose to use it.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 206; Noes, 53.

Division No. 243.]
AYES.
[11.5 p.m.


Agnew, Lieut.-Com. P. G.
Gretton, Colonel Rt. Hon. John
Petherick, M.


Albery, Irving James
Grigg, Sir Edward
Pickthorn, K. W. M.


Apsley, Lord
Grimston, R. V.
Procter, Major Henry Adam


Aske, Sir Robert William
Guinness, Thomas L. E. B.
Pybus, Sir John


Assheton, Ralph
Gunston, Captain D. W.
Raikes, Henry V. A. M.


Balley, Eric Alfred George
Hacking, Rt. Hon. Douglas H.
Ramsay, Capt. A. H. M. (Midlothian)


Balfour, Capt. Harold (I. of Thanet)
Hannon, Patrick Joseph Henry
Ramsay, T. B. W. (Western Isles)


Beaumont, Hn. R. E. B. (Portsm'th, C.)
Harbord, Arthur
Ramsbotham, Herwald


Benn, Sir Arthur Shirley
Harvey, George (Lambeth, Kenningt'n)
Ramsden, Sir Eugene


Bennett, Capt. Sir Ernest Nathaniel
Haslam, Henry (Horncastle)
Reed, Arthur C. (Exeter)


Bernays, Robert
Haslam, Sir John (Bolton)
Reid, David D. (County Down)


Bevan, Stuart James (Holborn)
Headlam, Lieut.-Col. Sir Cuthbert
Reid, William Allan (Derby)


Blindell, James
Hellgers, Captain F. F. A.
Remer, John R.


Bossom, A. C.
Heneage, Lieut.-Colonel Arthur P.
Rhys, Hon. Charles Arthur U.


Boulton, W. W.
Herbert, Capt. S. (Abbey Division)
Roberts, Sir Samuel (Ecclesall)


Bowyer, Capt. Sir George E. W.
Hornby, Frank
Robinson, John Roland


Boyce, H. Leslie
Horobin, Ian M.
Ropner, Colonel L.


Braithwaite, J. G. (Hillsborough)
Horsbrugh, Florence
Rosbotham, Sir Thomas


Broadbent, Colonel John
Hudson, Capt. A. U. M. (Hackney, N.)
Ross, Ronald D.


Brown, Col. D. C. (N'th'l'd., Hexham)
Inskip, Rt. Hon. Sir Thomas W. H.
Ross Taylor, Walter (Woodbridge)


Brown, Brig.-Gen. H. C. (Berks., Newb'y)
Jackson, Sir Henry (Wandsworth, C.)
Ruggles-Brise, Colonel Sir Edward


Browne, Captain A. C.
James, Wing-Com. A. W. H.
Runge, Norah Cecil


Buchan-Hepburn, P. G. T.
Jamieson, Rt. Hon. Douglas
Russell, Albert (Kirkcaldy)


Burghley, Lord
Jones, Henry Haydn (Merioneth)
Russell, Alexander West (Tynemouth)


Burgin, Dr. Edward Leslie
Jones, Lewis (Swansea, West)
Russell, R. J. (Eddisbury)


Burnett, John George
Lamb, Sir Joseph Quinton
Rutherford, John (Edmonton)


Butt, Sir Alfred
Law Sir Alfred
Rutherford, Sir John Hugo (Liverp'l)


Caporn, Arthur Cecil
Law, Richard K. (Hull, S. W.)
Salmon, Sir Isidore


Carver, Major William H.
Leech, Dr. J. W.
Salt, Edward W.


Castlereagh, Viscount
Leighton, Major B. E. P.
Samuel, M. R. A. (W'ds'wth, Putney)


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Lennox-Boyd, A. T.
Sandys, Duncan


Chamberlain, Rt. Hon. N. (Edgbaston)
Levy, Thomas
Selley, Harry R.


Cochrane, Commander Hon. A. D.
Lewis, Oswald
Shepperson, Sir Ernest W.


Colman, N. C. D.
Lindsay, Noel Ker
Simon, Rt. Hon. Sir John


Colville, Lieut.-Colonel J.
Llewellin, Major John J.
Sinclair, Col. T. (Queen's Unv., Belfast)


Conant, R. J. E.
Lloyd, Geoffrey
Smiles, Lieut.-Col. Sir Walter D.


Cooper, A. Duff
Lockwood, John C. (Hackney, C.)
Smith, Bracewell (Dulwich)


Cooper, T. M. (Edinburgh, W.)
Loder, Captain J. de Vere
Smith, Sir J. Walker-(Barrow-in-F.)


Courthope, Colonel Sir George L.
Loftus, Pierce C.
Smith, Louis W. (Sheffield, Hallam)


Craddock, Sir Reginald Henry
Lovat-Fraser, James Alexander
Smith, Sir Robert (Ab'd'n & K'dlne, C.)


Crookshank, Col. C. de Windt (Bootle)
Lumley, Captain Lawrence R.
Sotheron-Estcourt, Captain T. E.


Crookshank, Capt. H. C. (Gainsb'ro)
Mabane, William
Southby, Commander Archibald R. J.


Cross, R. H.
McCorquodale, M. S.
Spencer, Captain Richard A.


Crossley, A. C.
MacDonald, Rt. Hon. M. (Bassetlaw)
Stewart, J. Henderson (Fife, E.)


Cruddas, Lieut.-Colonel Bernard
McKie, John Hamilton
Stones, James


Culverwell, Cyril Tom
Macmillan, Maurice Harold
Stourton, Hon. John J.


Dalkeith, Earl of
Margesson, Capt. Rt. Hon. H. D. R.
Stuart, Hon. J. (Moray and Nairn)


Davies, Edward C. (Montgomery)
Martin, Thomas B.
Sugden, Sir Wilfrid Hart


Davies, Maj. Geo. F. (Somerset, Yeovil)
Mason, Col. Glyn K. (Croydon, N.)
Thomas, James P. L. (Hereford)


Denman, Hon. R. D.
Mayhew, Lieut.-Colonel John
Thomson, Sir James D. W.


Dickie, John P.
Mellor, Sir J. S. P.
Thorp, Linton Theodore


Dower, Captain A. V. G.
Mills, Major J. D. (New Forest)
Todd, A. L. S. (Kingswinford)


Duncan, James A. L. (Kensington, N.)
Mitchell, Harold P. (Br'tf'd & Chisw'k)
Touche, Gordon Cosmo


Eastwood, John Francis
Molson, A. Hugh Elsdale
Turton, Robert Hugh


Ellis, Sir R. Geoffrey
Moore, Lt.-Col. Thomas C. R. (Ayr)
Ward, Irene Mary Bewick (Wallsend)


Elliston, Captain George Sampson
Moreing, Adrian C.
Ward, Sarah Adelaide (Cannock)


Elmley, Viscount
Morgan, Robert H.
Waterhouse, Captain Charles


Emmott, Charles E. G. C.
Morris, John Patrick (Salford, N.)
Watt, Major George Steven H.


Emrys-Evans, P. V.
Morris-Jones, Dr. J. H. (Denbigh)
Wells, Sydney Richard


Everard, W. Lindsay
Morrison, G. A. (Scottish Univer'ties)
Williams, Charles (Devon, Torquay)


Fermoy, Lord
Muirhead, Lieut.-Colonel A. J.
Williams, Herbert G. (Croydon, S.)


Fielden, Edward Brocklehurst
Nall, Sir Joseph
Wills, Wilfrid D.


Ford, Sir Patrick J.
Nunn, William
Windsor-Clive, Lieut.-Colonel George


Fraser, Captain Sir Ian
O'Donovan, Dr. William James
Wise, Alfred R.


Fremantle, Sir Francis
Patrick, Colin M.
Womersley, Sir Walter


Fuller, Captain A. G.
Peake, Osbert
Worthington, Sir John


Gault, Lieut.-Col. A. Hamilton
Pearson, William G.



Glossop, C. W. H.
Penny, Sir George
TELLERS FOR THE AYES.—


Gluckstein, Louis Halle
Percy, Lord Eustace
Lieut.-Colonel Sir A. Lambert Ward


Graves, Marjorie
Perkins, Walter R. D.
and Captain Hope.


NOES.


Adams, D. M. (Poplar, South)
Bevan, Aneurin (Ebbw Vale)
Cripps, Sir Stafford


Attlee, Rt. Hon. Clement R.
Chapman, Col. R. (Houghton-le-Spring)
Daggar, George


Banfield, John William
Cleary, J. J.
Davies, David L. (Pontypridd)


Dobbie, William
Jones, Morgan (Caerphilly)
Roberts, Aled (Wrexham)


Edwards, Sir Charles
Kirkwood, David
Samuel, Rt. Hon. Sir H. (Darwen)


Foot, Dingle (Dundee)
Lansbury, Rt. Hon. George
Smith, Tom (Normanton)


Gardner, Benjamin Walter
Leonard, William
Strauss, G. R. (Lambeth, North)


Greenwood, Rt. Hon. Arthur
Logan, David Gilbert
Strickland, Captain W. F.


Grenfell, David Rees (Glamorgan)
Lunn, William
Tinker, John Joseph


Griffith, F. Kingsley (Middlesbro', W.)
Macdonald, Sir Murdoch (Inverness)
West, F. R.


Griffiths, George A. (Yorks, W. Riding)
McEntee, Valentine L.
White, Henry Graham


Groves, Thomas E.
Maclean, Neil (Glasgow, Govan)
Williams, Edward John (Ogmore)


Grundy, Thomas W.
Mainwaring, William Henry
Williams, Thomas (York, Don Valley)


Hall, George H. (Merthyr Tydvil)
Mallalieu, Edward Lancelot
Wilmot, John


Harris, Sir Percy
Mason, David M. (Edinburgh, E.)
Wood, Sir Murdoch McKenzie (Banff)


Holdsworth, Herbert
Milner, Major James



Howard, Tom Forrest
Owen, Major Goronwy
TELLERS FOR THE NOES.—


Janner, Barnett
Pickering, Ernest H.
Mr. D. Graham and Mr. Paling.


John, William
Rea, Sir Walter

CLAUSE 31.—(Further relief of small annuities from estate duty.)

11.13 p.m.

Mr. LUNN: I beg to move, in page 22, line 7, at the end, to add:
and as if, in the case of a widow's annuity from a superannuation fund established in connection with her husband's employment, no duty were chargeable.
This is the last Amendment to the last Clause but one of the Bill, and I am not going to detain the Committee more than a minute or two. But there is a case to be put forward for this Amendment, and I am going to invite the Chancellor to amend the law more than he has done in the Clause as it stands now. I think it is 40 years since it was first decided that Estate Duty was payable on the capital value of certain pensions, but I understand that this Estate Duty was not imposed until recent years. It has caused considerable hardship in many cases where it has been imposed. Take the case of a man who is entitled to a pension or to superannuation, and who, having more regard for his wife when he is gone than some other people may have, decides to allot a certain amount of that pension to her. If he allots more than £25, Estate Duty is levied on the capital value of the pension. This has caused considerable annoyance, and several organisations took up the matter. The Trade Union Congress listened to arguments and ultimately decided to request a deputation, which met the Chancellor of the Exchequer a few months ago upon this matter. I would like to quote the words which were used by the Chancellor of the Exchequer when he made his Budget speech. He said:
The Finance Bill will contain a small concession in the Estate Duties. Where a deceased person has provided during his life for an annuity at his death for the benefit of his family or others there is exemption at present, under the Finance
Act of 1894, for annuities which do not exceed £25 a year. It has been represented to me that that limit of £25, fixed 40 years ago, is now too low. I agree, and I propose, therefore, to extend the exemption to annuities not exceeding £52 a year."—[OFFICIAL REPORT, 15th April, 1935; col. 1626, Vol. 300.]
It is rather unusual for me to be thanking any member of the Government, but on this occasion, on behalf of the organisations concerned and of myself, I thank the Chancellor. We appreciate very much what he has done in the Clause in improving the position of widows who have been allotted pensions by their husbands. The deputation put before the Chancellor the point that even £52 did not meet the case and that he ought to put the figure at £100. I am now asking him to consider extending the amount mentioned in the Clause to £100, or, if he cannot see his way to go so far as that, to graduate the amount that should be paid from £52 to £100. The Amendment suggests that Estate Duty from pensions allotted to widows as a result of superannuation should be abolished altogether, and that is what I should like to see done. I hope that the Chancellor will be able to go further than he has already gone.

11.18 p.m.

Mr. WILMOT: Those who will benefit from the concession which has been obtained will be grateful to the Chancellor of the Exchequer and the Trade Union Congress for having brought the improvement about. There is a further point, however, which is overdue and which would cost very little money. I would like to urge that the Chancellor should exempt from Estate Duty altogether widows' annuities which come to them as a result of a superannuation scheme established in connection with their deceased husbands' employment. These annuities are very small and concern only small people, and it would be an act of
justice that the State should cease to take a toll from them by way of Estate Duty. If the Chancellor of the Exchequer should have a further opportunity of employing his histrionic arts, I am sure he would not like to feel that any part of the surplus he may have has come from such a source as this. I sincerely hope he will round off that piece of good work by granting this concession.

11.20 p.m.

Mr. CHAMBERLAIN: The hon. Member has mentioned that the Trades Union Congress was interested in this affair. I think it right to say, however, that the first representations I received on the matter came from the Association of Superannuation and Pension Funds, who communicated with me as long ago as last July. They were interested in all kinds of annuities, not only for widows, but for dependants. The deputation which I received from the Trades Union Congress confined itself more particularly to the case of widows and the Amendment deals only with the case of widows' annuities. I do not quite understand why it should be thought that the exemption should be confined to widows. The proposal in the Bill, which deals with all kinds of annuities, seems to me to be more humane and logical than the proposal of the Amendment. The Amendment does not put any limit upon the amount of the annuity to be exempted, but would apply to any annuity from a superannuation fund. I do not see why it should be suggested that there should be exemption in the case of an annuity of a substantial amount. The hon. Member for East Fulham (Mr. Wilmot) said that these are all small annuities received by small people, but it is these small annuities of small people that I have endeavoured to deal with in the Bill. I was certainly impressed by the argument that the figure of £25, fixed as far back as 40 years ago, was out of keeping with the conditions of to-day, and in making the figure £52 it seemed to me that I was dealing with the small annuities. If I were to extend it as the Amendment suggests, it would mean a substantial loss of revenue, and therefore I am afraid I cannot accept the Amendment.

Amendment negatived.

Clause ordered to stand part of the Bill.

Clause 32 ordered to stand part of the Bill.

NEW CLAUSE.—(Deduction in certain cases in respect of dependent relative.)

If any person who is assessable to Income Tax proves to the satisfaction of the Commissioners of Inland Revenue that during the year of assessment he had a relative living with him who had been denied, wholly or in part, unemployment allowance under Part II of the Unemployment Act, 1934, or public assistance, on the ground that the relative was being maintained wholly or partly by him, he shall be entitled to a deduction of fifty pounds in respect of his assessment.—[Mr. T. Williams.]

Brought up, and read the First time.

11.23 p.m.

Mr. T. WILLIAMS: I beg to move, "That the Clause be read a Second time."
This Clause may almost be regarded as a "hardy annual." During the Committee stage of the Bill I have heard the Chancellor's replies to the submissions that have been made to him, but I think that in this case he will have no substantial reasons to advance against accepting the Clause. It is designed to help the person maintaining a relative who has been denied unemployment assistance in whole or in part because of his having been maintained by one or more persons within the home. This Clause has been moved on three occasions. I recall that, when it was moved in 1932, the then Financial Secretary expressed profound sympathy with its object, and promised to go carefully into the matter and ascertain exactly what the Treasury might be able to do. In 1933, when a similar Clause was moved, the Financial Secretary again expressed sympathy with its object, but pointed out that the wording of the Clause might not have the desired effect, and he said it might create certain anomalies.
The Clause suggests that, where anyone is maintaining an unemployed person who has either been denied any unemployment assistance or has only been granted a small sum, the person who is obliged to maintain him should be entitled to a deduction of £50 in consideration of the compulsory maintenance of the unfortunate person who happens to be unemployed. Either last year or in
1933 the Financial Secretary to the Treasury suggested that surveyors of taxes were called upon to exercise a great deal of sympathy where such a case as this was discovered, and said that a surveyor might regard an aged person who was unemployed, and was denied unemployment assistance because of the income probably of a son, as being incapacitated through old age. If in such a case the person was unlikely to obtain employment, the surveyor of taxes might be permitted to concede him the old age dependant's allowance, namely, £25. He also said that in the case of a son maintaining the home where the father was unemployed, and there were brothers and sisters, it might be possible for the surveyor of taxes to regard the brothers and sisters as dependent children.
We do not think that that method of dealing with this problem is the right one. First of all, it must be illegal. It cannot be legal until it becomes part and parcel of a Finance Act. The Government apply the means or household test, and they say to any person who happens to be receiving a wage of, say, £3 10s. or maybe £4, £4 10s. or £5 per week, should there be one or other, father or son, unemployed for a certain period, the one must be maintained by the other. Clearly, where the Government have applied the means test to that extent, they ought not to assess for the purposes or Income Tax the sum which must go to maintain the unemployed person for whom no assistance has been made available.
I know that the Chancellor of the Exchequer is fully cognisant of every argument advanced in favour of this proposed new Clause, and also that the Financial Secretary on two occasions has submitted that he is fully in sympathy with the object in view and has suggested two things. He suggested, first of all, that it is almost administratively impossible because of the fluctuation of the periods that a man or woman may be in or out of work. He told us on one occasion, for instance, that the surveyor of taxes would have to assess for a period of six months, three months or six weeks, or for some period less than 12 months, and that it would involve a great deal of clerical work to keep pace with the in-and-out of work all who come within the means test. We intend the new Clause this year to include
public assistance since the same arguments apply. It may be that the administrative difficulty is almost insuperable, but the same Government that applied the means test ought at least to find a means of mitigating any anomaly previously unforeseen, but which now is clearly observable by everybody. If as a result of the fluctuations of employment they find that a fixed sum of £50 may be too much, £50 being 100 per cent. in excess of the dependants' allowance of £25, then it is one of those problems which the Treasury ought to find a means of solving. If they say that where a son is unemployed the father must maintain him out of his earnings, then clearly they cannot expect the father to pay Income Tax on the moneys that have been expended on the maintenance of the son. In the other case, where the father is unemployed and the son is employed, and the sum is sufficient to warrant the unemployment assistance committee in denying the parent unemployment assistance, they ought not to call upon the son to maintain the father and at the same time to exact from the son Income Tax on that proportion of his income which has gone to maintain his unemployed parent.
I do not think that the case need be argued further. Clearly it is a case with which the Chancellor of the Exchequer ought to have dealt during the past two years. There has been time to study the question and to have found a way of dealing with it, but not a way whereby the Income Tax surveyor is left wholly in charge to determine what he thinks should be done, whether right or not. You might have an Income Tax surveyor in Birmingham who was very generous and sympathetic and who would make all the allowances which the Financial Secretary stated in 1933 might be made, but you might have one in Sheffield or elsewhere who was not nearly so generous or sympathetic and would make none of those allowances. Where a case has been established the Chancellor of the Exchequer ought to find ways and means of at least remitting a sum equal to the amount withheld by the unemployment assistance committee as a result of the earnings of one member of the household. For these reasons and on the strength of the justice of the case I move the Amendment.

11.32 p.m.

Mr. GRAHAM WHITE: I should like to support the Amendment: particularly for the reasons which I have previously advanced when the matter has been under discussion. I do not think that there can be any lack of sympathy in any quarter of the House with the object of the Clause. It is a very great hardship to those who have been obliged by the operation of the means test to support relatives for a longer or shorter period and then be called upon to pay Income Tax in respect of the income which they have already spent on a wholly worthy object. I have known many cases of people who for a long period have very willingly supported relatives who have been unfortunate enough to be unemployed, but their attitude has been changed when, having exhausted the whole of their resources in this way, they have suddenly been called upon to meet a substantial demand in regard to Income Tax.
My hon. Friend referred to the suggestion made on a previous occasion by a Financial Secretary to the Treasury, that the taxing authorities might deal as leniently as they possibly could with people, within the rules, but in a very large number of cases that have come to my notice they have not been successful in exempting the persons called upon for tax. I think that they have carried out the suggestion and have done the utmost within the limits of the law to meet these hard cases, but the fact remains that there are quite a number of cases in which it is quite impossible for them to meet the difficulty within the provisions of the law. There are technical difficulties in the way of making exemptions in respect of annual assessments with regard to these fluctuating charges, but it should not be beyond the power of the Treasury to find some method by which these cases, the justice of which is admitted, can be exempted from this tax.

11.37 p.m.

Mr. COOPER: a
The hon. Member who moved the new Clause with his customary fairness stated my case, in reply, almost as well as he stated his own. He mentioned one of the principal difficulties in accepting the Amendment, but did not suggest any remedy. He simply said that it should not be beyond the wit of so wise a Government as the present to find a reply to a question to which he himself
could not give an answer. But apart from the administrative difficulty the Amendment itself would create fresh anomalies. The hon. Member reminded us that under the present law an Income Tax payer who was supporting a dependent relative, aged or infirm, was entitled to the benefit of £25, but under his proposal, if the dependent relative is neither aged nor infirm but merely unemployed he would be entitled to the benefit of £50. That obviously would be an anomaly; it would be unfair. Further, many people are supporting relatives in similar circumstances, who are not capable of qualifying for unemployment benefit, one who has been in clerical employment. They are just as much a burden on their supporter and have probably just as little hope of getting employment again as many others. A similar Amendment was moved last year by the hon. Member for Colne Valley (Mr. Mallalieu) and during that discussion it was suggested that those responsible for unemployment assistance should take into account the payments which an Income Tax payer made in supporting a relative as part of the expenses of the household. On that occasion the hon. Member for East Fulham (Mr. Wilmot) said:
I understood him to say that the public assistance authorities will be enjoined under the Bill to have regard to the tax upon a man's income in assessing the amount which he can be called upon to pay. Does that mean that they are to be instructed by the Minister to regard only the net income as income and not the gross income? If that is the meaning of the Minister's statement, the case which has been put by those who put forward this Clause has been largely met. If the Commissioners are required to have regard only to net income after the payment of tax, what we want will be aehiered."—[OFFICIAL REPORT, 12th June, 1934; col. 1586, Vol. 290.]
The Unemployment Assistance Board have recently considered this question and have definitely decided that where in determining the need of an applicant for unemployment allowance payments of Income Tax by a member of the household is claimed as a deduction from earnings it will be allowed as a special expense in the assessment of household resources. I think that that has gone far to meet the point raised, and I hope my hon. Friends will be content with that this year.

Mr. WHITE: Is that in force at the present time?

Mr. COOPER: Yes.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Extension of s. 19 of Finance Act, 1920.)

Section nineteen of the Finance Act, 1920 (which, as amended by section twenty-two of the Finance Act, 1924, and section eight of the Finance (No. 2) Act, 1931, makes provision for a deduction in respect of relative or other person taking charge of widowers' or widows' children or acting as housekeeper), shall be extended so as to apply to a person resident with an unmarried person in the capacity of housekeeper, and in the said section the expressions "widower" and "widow" shall be deemed to include, respectively, a husband living apart from his wife and a wife living apart from her husband.—[Mr. E. Williams.]

Brought up, and read the First time.

11.42 p.m.

Mr. E. WILLIAMS: I beg to move, "That the Clause be read a Second time."
It must be common knowledge to all of us that a great deal of hardship is sustained by married men who have left their wives and by wives who have left their husbands, in that they have to pay Income Tax because they cannot be designated as widows or widowers. Then there are the large number of cases of spinsters who are occupying premises and are obliged to engage housekeepers. Surely there is a case for persons in that category to have the same consideration as widows.

11.43 p.m.

Mr. COOPER: I am afraid that the Government cannot accept this new Clause. This is another instance of how one concession leads to the demand for another, and how the more is given the more is asked for. An extension was made not very long ago to widows and widowers, even though they had not to support children. The reason for the differentiation between married people and unmarried people was that the married people, besides having incurred the misfortune of the loss of the spouse, had undertaken certain responsibility, had set up a house which they were reluctant to leave or could not leave because they could not find suitable quarters elsewhere. They had undertaken a certain way of living and for sentimental or practical reasons were
obliged to carry on, and they could not carry on without someone to look after their affairs. The same reasons do not apply to single persons. If the new Clause were accepted it would have an effect which I am sure was not present in the mind of the hon. Member. It would lead directly to the position that it would be to the advantage of husband and wife to separate. They would be much better off each living under a separate roof and each employing a housekeeper, than they would be if they remained together. I do not suggest that anybody would be induced to take such a drastic step by such a temptation but the proposal of the new Clause would produce anomalies and create a not very desirable position. For those reasons the Government cannot accept it.

11.46 p.m.

Mr. T. SMITH: I am surprised at the remarks of the Financial Secretary. I have heard many excuses offered for the rejection of new Clauses on the Finance Bill but never the suggestion that because of some proposed Income Tax relief, there might be collusion between husbands and wives to separate.

Mr. COOPER: I never suggested it.

Mr. SMITH: But the hon. Gentleman rather flirted with the idea. Last year a similar Clause was rejected on the ground that it would encourage a bachelor to have a female in his house under the designation of a housekeeper, for whom he would be entitled to claim the allowance. Whether this new Clause is drafted rightly or wrongly I want the Financial Secretary to pay some attention to what I regard as an unjustifiable anomaly in the case of unmarried women who are maintaining houses. If a widow or widower has a housekeeper an allowance is made for that housekeeper in the calculation of Income Tax. But in the case of an unmarried person who has a house and is compelled to employ a housekeeper, no allowance is made. I have here a letter from a lady in my constituency, who, as far as I know, is not a supporter of my party, and she expresses the hope that the Government will do something to deal with the case of spinsters who are in a position similar to her own. She happens to have a little more money than the average spinster and she is compelled by the size of her house to have a housekeeper. But
because she is unmarried she receives no allowance in respect of the housekeeper. I hope the Financial Secretary will give some consideration to cases of that kind.

11.48 p.m.

Miss RATHBONE: I, also, appeal to the Financial Secretary for a reconsideration of this matter. I think there is something in the objection that if this new Clause were accepted in full, it would lead to some anomalies in cases of husbands and wives living apart and in certain circumstances it might make it profitable for them to live apart. But if that is the only objection, it can be met by dropping the second part of the Clause and dealing only with the case of the unmarried person. I assure the hon. Gentleman that this grievance is acutely felt by unmarried women and, very likely, it is also felt by unmarried men. Why should this distinction be made between the position of unmarried persons in this respect and that of widows and widowers? There was some common sense in the method adopted, so long as the allowance only applied where a housekeeper was in charge of children. The hon. Gentleman was quite right in saying that this is a case in which one concession inevitably leads to the demand for another, and that is because there is no logical half-way house, once you have departed from that rule, as to the children. There is no logic in stopping just where the present rule stops. Once you cease to make it necessary that the housekeeper should look after children, there is no logic in differentiating between the married and the unmarried.

Many unmarried women who have to employ housekeepers are very hard pressed and are very often in receipt of much lower salaries than the married people. They do not see why they should bear a tax of this kind when people better able to pay it are exempted. I hope, even if nothing should be done about it this year, that the matter will be reconsidered in reference to future years.

11.50 p.m.

Mr. GURNEY BRAITHWAITE: I only want to make one suggestion to the Government in connection with this new Clause which may possibly be of value if they are prepared to look into the principle of the Clause between now and next year. I do not think that the Clause, as drafted, is workable, but there is a good deal to be said for the theory laid down in it. The Chancellor of the Exchequer will find if he makes inquiries that in various parts of the country public assistance committees have been faced with very much the same situation, and they have been able to arrive at a system and a formula for dealing with this question of the housekeeper when deciding the needs of a household which have got over the main difficulty. In Sheffield that was so operated for a considerable time without even the social consequences which the Financial Secretary seems partially to have feared, and I think that that machinery might be of value if the Government were prepared to consider it.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 36; Noes, 153.

Division No. 244.]
AYES.
[11.50 p.m.


Adams, D. M. (Poplar, South)
Hall, George H. (Merthyr Tydvll)
Rathbone, Eleanor


Banfield, John William
Harris, Sir Percy
Rea, Sir Walter


Cleary, J. J.
Holdsworth, Herbert
Roberts, Aled (Wrexham)


Cripps, Sir Stafford
Janner, Barnett
Smith, Tom (Normanton)


Daggar, George
Jones, Morgan (Caerphilly)
Strauss, G. R. (Lambeth, North)


Davies, David L. (Pontypridd)
Leonard, William
Tinker, John Joseph


Dobbie, William
Logan, David Gilbert
White, Henry Graham


Edwards, Sir Charles
McEntee, Valentine L.
Williams, Edward John (Ogmore)


Foot, Dingle (Dundee)
Maclean, Neil (Glasgow, Govan)
Williams, Thomas (York, Don Valley)


Graham, D. M. (Lanark, Hamilton)
Mainwaring, William Henry
Wilmot, John


Grenfell, David Rees (Glamorgan)
Mallalieu, Edward Lancelot



Griffith, F. Kingsley (Middlesbro', W.)
Milner, Major James
TELLERS FOR THE AYES.—


Grundy, Thomas W.
Pickering, Ernest H.
Mr. John and Mr. Paling.


NOES.


Agnew, Lieut.-Com. P. G.
Benn, Sir Arthur Shirley
Brown, Col. D. C. (N'th'l'd., Hexham)


Apsley, Lord
Bilndell, James
Brown, Brig.-Gen. H. C.(Berks., Newb'y)


Aske, Sir Robert William
Boulton, W. W.
Browne, Captain A. C.


Balley, Eric Alfred George
Bowyer, Capt. Sir George E. W.
Burghley, Lord


Balfour, Capt. Harold (I. of Thanet)
Braithwaite, J. G. (Hillsborough)
Burgin, Dr. Edward Leslie


Beaumont, Hon. R. E. B. (Portsm'th, C.)
Broadbent, Colonel John
Burnett, John George


Carver, Major William H.
Inskip, Rt. Hon. Sir Thomas W. H.
Ramsay, T. B. W. (Western Isles)


Castlereagh, Viscount
James, Wing-Com. A. W. H.
Ramsden, Sir Eugene


Cayzer, Maj. Sir H. R. (Prtsmth., S.)
Jamieson, Rt. Hon. Douglas
Reed, Arthur C. (Exeter)


Chamberlain, Rt. Hon. N. (Edgbaston)
Jones, Lewis (Swansea, West)
Reid, William Allan (Derby)


Chapman, Col. R.(Houghton-le-Spring)
Lamb, Sir Joseph Quinton
Rhys, Hon. Charles Arthur U.


Cochrane, Commander Hon. A. D.
Law, Richard K. (Hull, S. W.)
Roberts, Sir Samuel (Ecclesall)


Colman, N. C. D.
Leighton, Major B. E. P.
Robinson, John Roland


Colville, Lieut.-Colonel J.
Lennox-Boyd, A. T.
Ropner, Colonel L.


Conant, R. J. E.
Levy, Thomas
Ross Taylor, Walter (Woodbridge)


Cooper, A. Duff
Lewis, Oswald
Ruggles-Brise, Colonel Sir Edward


Courthope, Colonel Sir George L.
Lindsay, Noel Ker
Runge, Norah Cecil


Craven-Ellis, William
Llewellin, Major John J.
Russell, Albert (Kirkcaldy)


Crookshank, Capt. H. C. (Gainsb'ro)
Lloyd, Geoffrey
Rutherford, John (Edmonton)


Cross, R. H.
Lockwood, John C. (Hackney, C.)
Rutherford, Sir John Hugo (Liv rp'l)


Crossley, A. C.
Loder, Captain J. de Vera
Salmon, Sir Isidore


Cruddas, Lieut.-Colonel Bernard
Loftus, Pierce C.
Salt, Edward W.


Culverwell, Cyril Tom
Lumley, Captain Lawrence R.
Samuel, M. R. A. (W'ds'wth, Putney).


Dalkeith, Earl of
Mabane, William
Sandys, Duncan


Dickie, John P.
McCorquodale, M. S.
Sinclair, Col. T. (Queen's Unv., Belfast)


Duncan, James A. L. (Kensington, N.)
Macdonald, Sir Murdoch (Inverness)
Smith, Sir J. Walker- (Barrow-in-F.)


Eillston, Captain George Sampson
McKie, John Hamilton
Smith, Sir Robert (Ab'd'n & K'dlne, C.)


Emmott, Charles E. G. C.
Macmillan, Maurice Harold
Sotheron-Estcourt, Captain T. E.


Entwistle, Cyril Fullard
Margesson, Capt. Rt. Hon. H. D. R.
Southby, Commander Archibald R. J.


Everard, W. Lindsay
Martin, Thomas B.
Spencer, Captain Richard A.


Ford, Sir Patrick J.
Mayhew, Lieut.-Colonel John
Stones, James


Fraser, Captain Sir Ian
Mellor, Sir J. S. P.
Stourton, Hon. John J.


Fremantle, Sir Francis
Mills, Major J. D. (New Forest)
Strickland, Captain W. F.


Fuller, Captain A. G.
Mitchell, Harold P. (Br'tf' & Chlsw'k)
Stuart, Hon. J. (Moray and Nairn)


Gault, Lieut.-Col. A. Hamilton
Molson, A. Hugh Elsdale
Sugden, Sir Wilfrid Hart


Glossop, C. W. H.
Morgan, Robert H.
Thomas, James P. L. (Hereford)


Graves, Marjorie
Morris-Jones, Dr. J. H. (Denbigh)
Thomson, Sir James D. W.


Grimston, R. V.
Morrison, G. A. (Scottish Univer'ties)
Thorp, Linton Theodore


Guinness, Thomas L. E. B.
Muirhead, Lieut.-Colonel A. J.
Todd, A. L. S. (Kingswinford)


Gunston, Captain D. W.
Nunn, William
Touche, Gordon Cosmo


Guy, J. C. Morrison
O'Donovan, Dr. William James
Turton, Robert Hugh


Hannon, Patrick Joseph Henry
Peake, Osbert
Ward, Irene Mary Bewick (Wallsend)


Harbord, Arthur
Pearson, William G.
Waterhouse, Captain Charles


Haslam, Sir John (Bolton)
Penny, Sir George
Watt, Major George Steven H.


Heligers, Captain F. F. A.
Percy, Lord Eustace
Wells, Sydney Richard


Herbert, Capt. S. (Abbey Division)
Perkins, Walter R. D.
Williams, Herbert G. (Croydon, S.)


Hope, Capt. Hon. A. O. J. (Aston)
Petherick, M.
Wills, Wilfrid D.


Hornby, Frank
Pickthorn, K. W. M.
Wise, Alfred R.


Horsbin, Ian M.
Procter, Major Henry Adam
Womersley, Sir Walter


Horsbrugh, Florence
Pybus, Sir John



Howard, Tom Forrest
Raikes, Henry V. A. M.
TELLERS FOR THE NOES.—


Hudson, Capt. A. U. M.(Hackney, N.)
Ramsay, Capt. A. H. M. (Midlothian)
Lieut.-Colonel Sir A. Lambert Ward




and Major George Davies.


Question put, and agreed to.

NEW CLAUSE.—(Reduced excise duty on playing cards.)

The excise duty on playing cards shall be reduced to two shillings per dozen packs as from the first day of July, nineteen hundred and thirty-five.—[Mr, H. Williams.]

Brought up, and read the First time.

11.59 p.m.

Mr. H. WILLIAMS: I beg to move, "That the Clause be read a Second time."
This, I think, is the fourth successive year in which a new Clause to this effect, together with a number of other new Clauses of a similar import, have appeared on the Order Paper in connection with the Finance Bill. Under the Import Duties Act duties were imposed on all goods that were not dutiable under other enactments. Therefore, there was a gap in our tariff system because, so far as we had any duties in existence the object of which was revenue, we did not put those duties where it was possible to put them on a protective basis. Some of
us studied this problem and from time to time made representations to the Chancellor in order that these gaps in our protective system might be filled. One or two of the gaps have been filled, but there are still some, and this is one. By a curious chance, although there is no protection for the British manufacturer of playing cards, the home market is apparently supplied almost entirely by the British product, so that the case for more protection may appear to be a thin one.
We often hear of cases of competition from Japan where the competition arises in connection with a cheap article, but in this case the competition which the British manufaturer has to face is almost entirely in respect of the more expensive variety of playing cards. A friend of mine is the head of the Worshipful Company of Makers of Playing Cards, although it does not make any cards. It is an ancient City company founded in the days of Charles II, of happy memory, for the purpose of protecting the makers
of playing cards. Although my friend does not make playing cards, he makes something much more interesting and important in the long run. He tells me that the manufacturers are subject to a curious form of competition in the expensive varieties. If you design a very beautiful decoration on the back of the cards, and decorate the kings, queens and jacks—which I did not hear called knaves until I came to London; perhaps that was appropriate—you must sell 6,000 copies of an edition before you can pay the fee to the artist, the cost of producing the plates and all the overhead expenses. You only make a profit if you sell beyond a certain quantity.
We can only be in competition in respect of playing cards with countries that speak English because it is no use sending to this country Czechoslovakian or Japanese playing cards printed in the native language. The United States is the only other English-speaking country that makes them. That country, which has a population three times as great as ours and, in normal times, a large luxury consuming population, is able to produce playing cards of high value, ship to this country the surplus products, and sell them at prices with which the British manufacturer cannot compete. About half the expensive type of cards sold in the West End of London are produced in the United States. That is the kind of competition to which our manufacturers of playing cards are exposed, and a fear has existed for some time that there may be a growth in dumping from other countries where the costs of production are lower than ours.
I am assured that the situation does merit serious consideration, and though this is not a very happy time to discuss it it is not my fault that the subject has to be raised at five minutes past 12 o'clock. That is the result of the undue eloquence of the hon. Member for East Fulham (Mr. Wilmot). If he had spoken less we might have been discussing this subject at a civilised hour, at nine in the evening. I am glad to see that as a reward for his eloquence he has been promoted to the Front Bench. I cannot hope that the Chancellor will accept my new Clause for two reasons. The first reason is that the proper way of dealing with the problem would be by an
increase of the Customs Duty on foreign playing cards, and only a Minister of the Crown can make that proposal. All I can do is to afford protection by a reduction of the existing Excise Duty, making it effectively lower than the existing Customs Duty. I do hope the Chancellor will look into the problem, which up to now has not been a very serious one, but which, I am advised, is becoming one of some seriousness, so that if he cannot deal with it in this Finance Bill he may, when he introduces the next one, as I hope he will, be able to give serious consideration to this subject.

12.8 a.m.

Mr. CHAMBERLAIN: My hon. Friend has rightly said that this is a matter which has been brought up on a number of occasions but has never yet received favourable consideration. I think the reason for that must be fairly obvious—because it never has been possible to make out a good case for the alteration. To make out a good case it must be shown that the production of playing cards in this country is being seriously affected by the importation of cards from other countries, but the figures I have do not bear out that view. The United States predominates in sending playing cards to this country. In 1934 the number of playing cards imported from the United States was 13,000 dozen packs, which compares with 27,000 dozen packs and 21,000 dozen packs in the two years 1929 and 1930, and also compares with a home production of 495,000 dozen packs in 1934–35.

Mr. H. WILLIAMS: Will the right hon. Gentleman give the figures for last year?

Mr. CHAMBERLAIN: Does the hon. Member mean the figures of importations? In 1933 they were 9,000 dozen packs from the United States, in 1934 13,000 dozen and in the first five months of this year 4,793 dozen. We must compare that importation with a production of 495,000 dozen in this country. It is obvious that the importation is trifling by comparison with the home production, and in the circumstances it does not seem to me that there is any need to be alarmed or to alter the present arrangements.

12.10 a.m.

Mr. H. WILLIAMS: I am sorry that the Chancellor of the Exchequer, for whom I have the profoundest respect, should have given such an inadequate reply. I am aware of the figures. I know that the home production was 849,000 dozen packs two years ago, and that it was 495,000 dozen last year, but that was because the gift coupon system was brought to an end. But I was dealing with expensive packs. The Chancellor of the Exchequer has not devoted his mind in the slightest degree to that point. I am familiar with the imports and am aware that in relation to production in this country they are small. But I was dealing with the importation of a particular category, and I drew attention to the sales in London of expensive types. In respect of these types, the importation is not the three or four per cent. which the Chancellor has in mind; it is more than half the total sales, and I would ask him to direct his mind to that point. I hope that he will give the matter much more serious consideration that he is prepared to do to-night.

12.12 a.m.

Mr. CHAMBERLAIN: The hon. Member has repeated what he said before. I will add one more figure to those I have given. The value of the amount of importation from the United States during the first five months of this year was £1,745. Surely he cannot suggest that that is considerable.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Amendment as to residuary legacies to charitable institutions.)

Section thirty of the Finance Act, 1922 (which relates to residuary legacies to charitable institutions), shall have effect subject to the following amendment:—
For the words "the expiration of the said year," there shall be substituted the words "the date of the death of the testator."—[Mr. H. Williams.]

Brought up, and read the First time.

12.13 a.m.

Mr. H. WILLIAMS: I beg to move, "That the Clause be read a Second time."
I hope that I shall have better luck with this Clause. In 1922 an Amendment was made which provided that if an estate took more than 12 months to wind
up and the residue of that estate was going to a charity the charity should be exempt from the Income Tax payable on the residue at any period after the expiration of 12 months from the period when the residue was handed over to the charity. The executors were given a year, and during that year the estate was treated as a corporation subject to Income Tax. The residue belonged to a charity and the charity paid Income Tax in respect of the income arising during a year after the death of the testator.
Let us imagine the theoretically perfect conditions, though not perfect for the testator. A person dies and leaves the whole of his estate to a charity. The whole of his estate consists of money in the bank, and therefore there is no problem of realisation. At the earliest conceivable moment after the testator dies the death has been proved, the will has been proved, the money is handed over to the charity, and theoretically that might happen within 48 hours after the death of the testator. The charity would get the income practically from the date of the death of the testator without having to pay any tax on the income. If delay arises, the charity loses in respect of the income from the first year to the extent of 4s. 6d. in the pound. The Exchequer is robbing the charity, it seems to me. I am not blaming the present Chancellor. The system goes back to the year 1922, the year before he became Chancellor, because he first occupied his exalted office in 1923, and the Budget of that year was introduced by the present Prime Minister. The sum involved cannot be very great. I was moved to propose this Clause by a chartered accountant in my constituency who has had a number of experiences where charities have suffered an unnecessary grievance.

12.15 a.m.

Mr. COOPER: The hon. Member said that he hoped he would have better luck with this Clause than he had with the last one. I do not know what he means by luck. He said, in moving the last Clause, that he hoped it would not be accepted. His hopes have been fulfilled, and I am quite sure that they will be fulfilled again. When he studies the wording he will be glad that the Clause should not be accepted, because it will leave standing the words
where residue is not paid from the charity until after one year of the death of the testator,
and will then go on to insert what he proposes. The result would be that, where an estate is wound up 13 months after the death of the testator, it would have the effect he desires, but where it is wound up before the charity would not be entitled to relief at all.

The DEPUTY-CHAIRMAN: If that be the case, the Clause is out of order.

Mr. H. WILLIAMS: On that point of Order—

The DEPUTY-CHAIRMAN: The proposed charge does not now exist. Therefore the Clause is out of order.

Mr. WILLIAMS: Because the Financial Secretary gives an interpretation of a Clause, which I think is inaccurate, that does not establish the fact that it is out of order.

The DEPUTY-CHAIRMAN: It appears to me that it might impose a charge, and that being so I shall have to withdraw the Clause from the Committee.

Ordered, "That the Chairman do report Progress, and ask leave to sit again."—[Captain Margesson.]

Committee report Progress; to sit again To-morrow.

Orders of the Day — IMPORT DUTIES (IMPORT DUTIES ACT, 1932).

12.20 a.m.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Dr. Burgin): I beg to move,
That the Additional Import Duties (No. 14) Order, 1935, dated the twenty-third day of May, nineteen hundred and
thirty-five, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-third day of May, nineteen hundred and thirty-five, be approved.
The effects of this Order are to raise the duty on imported works of marble from 15 per cent. to 20 per cent. ad valorem, and to reduce the duty on certain forms of sawn marble and worked marble. The working of marble is carried out by monumental masons in all parts of the country. The home production is about 14,000 tons, and the imports for 1933 were 19,298 tons valued at £416,934. The present, rate of imports is therefore of serious consequence to the home industry. The reasons for the imposition of the duty are set out in the Report of the Import Duties Advisory Committee, and I do not think the House will require me to give any further explanation, although I shall, of course, be happy to answer any questions.

Resolved,
That the Additional Import Duties (No. 14) Order, 1935, dated the twenty-third day of May, nineteen hundred and thirty-five, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said twenty-third day of May, nineteen hundred and thirty-five, be approved.

The remaining Orders were read, and postponed.

It being alter half-past Eleven of the Clock upon Wednesday evening, Mr. SPEAKER adjourned the House, without Question, put, pursuant to the Standing Order.

Adjourned at Twenty-two Minutes after Twelve o'Clock.